Executive Summary

This paper talks about the panama papers scandal. We will be mainly discussing what Panama papers
are and what their significance is. Moreover how it got leaked and impacted the world. We will also be
focusing on about how Panama scandal affected the economies and what actions did the government
took to deal the situation and punish the people involved in this considering whether it was a Tax matter
or a political issue.

Impact of Panama in Pakistan

Just like many other countries Pakistan was also greatly impacted by Panama. The sitting leadership was
accused of being involved in panama scandal and they were removed from their seats just like many
other leaders of the world were disqualified. The sitting prime minister of that time Muhammad Nawaz
Sharif was founded to have off shore holdings. PM Nawaz Sharif’s children mainly had off shore
companies and residencies and PM himself was acting as a director of a company registered in UAE
while he was ruling. This was not acceptable because it comes under conflict of interest according to the
constitution of the country but the charge was yet to be proven in the court. The ruling party denied all
accusations and termed it as a propaganda but at the same time the ruling party was not able to give a
satisfactory justification in front of the parliament. Initially no one took it seriously and the members of
ruling party just thought of it as a hype come and go mainly due to poor accountability and
implementation of laws as per the history of Pakistan. However the leading opposition party of that time
chaired by Imran Khan never let this matter cool down. Imran khan previously also had given a very
tough time to PM Nawaz Sharif mainly on corruption and rigging of general elections. Imran khan played
a major role and led a very aggressive opposition to bring this matter to a logical conclusion. As usual no
one listened to him which triggered him to come out the hard way and he started the Jalsa campaign
and lockdowns of cities to register his protest. Supreme Court then was forced to intervene and took
Suo moto and formed a Joint investigation team to look into the matter. After a period of 6 months the
JIT handed over their investigation on basis of which for the first time ever a sitting Prime Minister was
disqualified for life and imprisonment of 7 years. He also faced a fined of $10.6 million on corruption
charges. Moreover the children and other families had references against them which were investigated
and then punished accordingly in which Sharif’s daughter Maryam was sentenced seven-year prison and
his son-in-law Muhammad Safdar to one year imprisonment.

Reference: https://www.nytimes.com/2017/07/28/world/asia/panama-papers-pakistan-nawaz-
sharif.html?auth=link-dismiss-google1tap

Loss of revenue and economy in the country

Pakistan because of panama scandal also suffered a major loss to the economy and the revenues. After
panama leaks people and businesses lost trust in the government because all their tax money was going
into the leader’s hands which they were using to have their assets increased. This led to tax evasion as
people were reluctant to pay taxes and the economy suffered because of the shortfall of the money. So
government at that time took huge loans which also artificially placed US dollar under Rs100. Moreover
because of Panama, Pakistan face a huge impact on its capital market as KSE100 took a nosedive by
about 3300 points or by 7% from 50192 points to 46874 that was lowest in 2017. The total value of loss
equaled USD 6.7 billion from highest market capitalization of USD 95 billion to slightly over USD 88
billion. Foreign outflows continued and were USD 190 million in 2017 because of panama uncertainty.
Moreover after the removal of PM Nawaz, N league got a hit to their political clout for which they took
measures which were very harmful for the economy in the longer run but they did to regain their lost
standing. So, this means that leading party would have to spend more heavily before next elections and
would have to allocate more public resources to win over voters. This could mean an increased fiscal
deficit for the election year and an increased fiscal deficit would also mean that we may have to again
turn back to IMF or the World Bank for lending. Shabaz Sharif started making promises of cheap
electricity and no shortfall at the time when there was energy crisis and in order to fulfill the promises,
they were giving electricity at a unit price which was below their costs and this increased the circular
debts to very high numbers which was pushing the country towards a bankruptcy. N league also
announced new projects and infrastructure development which again led to high amounts of funds and
financial disrupt.

Reference: https://en.dailypakistan.com.pk/21-Apr-2017/the-financial-impact-of-panama-case-on-
pakistan

https://www.pakistantoday.com.pk/2017/04/23/how-supreme-courts-decision-on-panama-leaks-will-
affect-the-economy/