|Terrorism Toll in Pakistan. Source: SATP.org
|Pakistan's External Debt. Source: Wall Street Journal
When former Prime Minister Nawaz Sharif repeatedly asks "Mujhe Kyun Nikala" (Why was I ousted), he appears to be arguing that, because of his government's unquestionably better performance than his predecessor PPP government's, he deserves to be forgiven without explicitly asking for forgiveness. What are his sins? His biggest sin is that he and his family have accumulated large amount of unexplained wealth in offshore shell companies during his three terms as Pakistan's prime minister. He and his family did not disclose this wealth until they were forced to acknowledge it after Panama Papers leaks. They were given ample opportunity by the Pakistan Supreme Court to prove that it was acquired by legitimate means. But they failed to do so.
Mr. Sharif and his family are not unique as owners of unexplained offshore wealth. Washington-based Global Financial Integrity (GFI) estimates that developing countries have lost as much as $13.4 trillion through unrecorded capital flight since 1980. Bloomberg reports that Pakistanis own $150 billion worth of undeclared offshore assets, attributing this estimate to Syed Muhammad Shabbar Zaidi, a partner at Karachi-based A.F. Ferguson and Co. -- an affiliate of PricewaterhouseCoopers LLP.
Iqama (Foreign Residency) vs Panama:
Mr. Sharif says that he was removed for "iqama", not "Panama". What he doesn't acknowledge is that having "iqama" (foreign residency) facilitates "Panama", the hiding of assets in offshore locations.
Assets held by people in offshore tax havens are tracked by their country of residence, not by their citizenship, under OECD sponsored Agreement On Exchange of Information on Tax Matters. Pakistan is a signatory of this international agreement. When Pakistan seeks information from another country under this agreement, the nation's FBR gets only the information on asset holders who have declared Pakistan as their country of residence. Information on those Pakistanis who claim residency (iqama) in another country is not shared with Pakistani government. This loophole allows many Pakistani asset holders with iqamas in other countries to hide their assets. Many of Pakistan's top politicians, bureaucrats and businessmen hold residency visas in the Middle East, Europe and North America.
The last five years of Pakistan's outgoing government of the Pakistan Muslim League (Nawaz) have seen the revival of Pakistan's economy and completion of many long delayed infrastructure and energy projects. Mr. Nawaz Sharif deserves full credit for it. At the same time, the PML government is responsible for slow progress on human development indicators, major decline in exports, growing twin deficits of budget and external accounts, mounting public debt and lack of transparency in financial matters. It is the lack of transparency that has been brought in sharp focus with the removal of Prime Minister Nawaz Sharif by the nation's Supreme Court in the aftermath of Panama Papers. The leak of these papers revealed his family's ownership of undeclared and unexplained substantial assets abroad.
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