Musharraf Revived Pakistan's Economy and Reduced Poverty
By RiazHaq
CA
Twelve years after GeneralMusharraf's assumption of power, the dominant political rhetoric on the airwaves of Pakistan completely obscures his daring rescue of the nation's economy from total collapse in 1999. Instead, Musharraf's enemies are focusing entirely on his missteps.
To set the record straight, let me quote from the current PPP government's letter it signed and sent to the IMF in 2008. Here is how it hails Musharraf's economic record without mentioning his name:
"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07.....the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". ( see MEFP , November 20, 2008, Para 1).
ECONOMIC GROWTH UNDER PRESIDENT MUSHARRAF: In the 1990s, economic growth plummeted to between 3% and 4%, poverty rose to 33%, inflation was in double digits and the foreign debt mounted to nearly the entire GDP of Pakistan as the governments of Benazir Bhutto (PPP) and Nawaz Sharif (PML) played musical chairs. Before Sharif was ousted by General Musharraf in 1999, the two parties had presided over a decade of corruption and mismanagement. In 1999 Pakistan’s total public debt as percentage of GDP was the highest in South Asia – 99.3 percent of its GDP and 629 percent of its revenue receipts, compared to Sri Lanka (91.1% and 528.3% respectively in 1998) and India (47.2% and 384.9% respectively in 1998). Internal Debt of Pakistan in 1999 was 45.6 per cent of GDP and 289.1 per cent of its revenue receipts, as compared to Sri Lanka (45.7% and 264.8% respectively in 1998) and India (44.0% & 358.4% respectively in 1998).
POVERTY REDUCTION UNDER PRESIDENT MUSHARRAF: The IMF has acknowledged that Pakistan became one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden , raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.
PER CAPITA GDP RISE
Per Capita PPP GDP: Poverty in Pakistan decreased from about 34% to 17% and hunger went down with it during Musharraf years from 2000 to 2008, as reported by World Bank and IFPRI as lagging indicators. The global hunger index score, published annually by the International Food Policy Research Institute (IFPRI), is a number between zero and 100, with lower figure signifying less hunger.
Unfortunately, hunger in Pakistan is rising again after several years of decline under President Musharraf. World hunger data collected from 2006 to 2009 shows that Pakistan's hunger index score has worsened this year to 20.7 (based on 2009 data and reported in 2011) after three prior consecutive years of improvement. International Food Research Institute's GHI (Global Hunger Index) score for Pakistan improved from 21.7 in 2008 to 21.0 in 2009 to 19.1 in 2010, and its world ranking has dropped to 59 in 2011 from 52 in 2010. It was ranked 61 in 2008 and 58 in 2009 on a list of 81+ nations.
Since taking the reins of power more than three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat, sugar and other commodities every year, a policy at least partly driven by politics of patronage to enrich the PPP’s rural landowning constituency. This policy has resulted in the following imbalances:
1. It is transferring the additional new income of over Rs. 300 billion in the current fiscal year alone to the ruling party's power base of landowners in small towns and villages, from those working in the urban industrial and service sectors.
2. It has driven up food prices dramatically for all Pakistanis, particularly hurting the poor people the most.
3. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits, and heavy borrowing by the government from the central bank and various commercial banks. .
4. It has forced the State Bank of Pakistan to maintain a tight monetary policy which is drying up the much-needed credit for the industries and the average consumers alike, and stifling economic growth.
At 22.67% improvement in its hunger score since 1990, Pakistan has improved less than India's 23.97% reduction, explained by little or no progress in Pakistan during the lost decade of the 1990s under Bhutto and Sharif governments.
GDP GROWTH RATE DURING AND AFTER THE MUSHARRAF YEARS: Since the return of the current PPP government with its replay of incompetence and corruption of the 1990s, economic growth is barely keeping pace with population growth, per capita GDP has decreased in real terms, prices of basic commodities have risen 3 to 4 times of the level in 2008, the Pakistani rupee has lost about 30% of its value against the US dollar, and the nation's economy has been on IMF's life support for much of this period, as it was prior to Musharraf's coup. The corrupt and incompetent politicians from the 1990s have crushed all hopes and dreams Pakistani voters yet again, and their faith in democracy is being sorely tested.
(The writer is an independent blogger)
------------------------------------------------------------------------------
