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Performance of Pakistan's economy

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  8. FACTS

A survey conducted by Szabist’s Executives poll

Sep 20 - 27, 1999

The current fiscal year ended on June 30, 1999 without bringing any good news to us. The performance of Pakistan’s economy remains disappointing during the year owing to many reasons. Among other things, economic sanctions slapped by the USA, halting of the loans by the IMF, the Asian Development Bank, and the World Bank, worldwide recession and depressed domestic demand were the main reasons, which pushed the economy down the hill.

Good news coming from the official quarters, however, suggests that the inflation and budget deficit have come down, the rupee has remained stable during the year, the trade deficit has shrunk, and the foreign exchange reserves have passed $ 1.5 billion mark.

The budget for the fiscal year 1999-2000 also presented in the parliament in June 1999. The budget received a mix response both from the public and business community.

A great threat to the economy, recently acknowledged, is the year 2000 (Y2K) problem or millennium bug. Like other developing countries Pakistan’s economy is also very much exposed to the threat emanating from the Y2K bug. According the World Bank survey conducted in January this year, Pakistan has been placed among the countries which have medium awareness about the Y2K.

In the above backdrop a survey was conducted to clear the smog of uncertainty and confusion.

Respondents: A random sample of 90 multinational and large companies based in Karachi was selected of which 79 companies respondent the question naire.

Period: June-July 1999

Method: Personal interviews and by facsimile.

Conducted by: Research and Consultancy Wing of Shaheed Zulfikar Ali Bhutto Institute of Science and Tech nology (SZABIST), Karachi.

The objectives of the survey were:

1. To know the views of business community based in Karachi (as Karachi is the financial capital of the country) about the present state of the economy and the budget 1999-2000

2. To know the preparations being done by the large companies including some multinational companies and financial institutions to check the Y2K bug and;

3. To seek suggestions from the senior executives of large companies and financial institutions to put the economy back on rails.

Survey details

Most of the executives interviewed belonged to age bracket group of 31-50 and had good professional degrees such as, CA, MBA, and MSc. and MA. All of them were well placed in their organization and were working at senior level position such as, senior manager, general manager, vice president, chief executive, etc.


Questions and response about the general economic trend

About the pace of their business, 53% said that their business was running at a medium pace now, 38% replied slowly, and 9% said fast.

About the growth of their business, 43% saw their business growing in the year 2000 (Y2K), 27% said stagnant, 7% said declining, and 23% said don’t know.

About Pakistan’s economy growth, 48 % said it will be moving slowly in the Y2K, 22% said declining, 20% said stagnant, and 8% said don’t know.

When it comes to the implementation of government’s policies, 46% said government sometimes works on its policies, 23% said it never works, 15% said it always does, and 16% remained neutral.

Coming to the Independent Power Projects issue, 69% said the government tackled the issue unprofessionally, 11% said professionally, and 20% said don’t know.

About the current state of the economy 66% showed deep concern, whilst 23% showed some concern, and 11 % remained neutral.

About the type of the government which they think suits to the economy, 37% voted for equal representation, 27% voted for the government of technocrats, 25% supported the democracy ( in existing form), and 11 % favored military rule.

56% said tension with India is likely to strongly affect the economy, 22% said lightly, 16% said moderately, and 6% said don’t know.

About the budget 1999-2000: About the present budget, 38% said it was friendly, 42% said no, and 20% said don’t know.

Asked did the present budget help unlock the economic growth process? 53% said it might not, 29% said it might, whilst 18% remained neutral.

Asked about the present tax increase on the salaried class people, 98% agreed to the question that the government must restructure the tax machinery system rather than keep on increasing taxes, however, 1 % said no, whilst 1 % said don’t know.

About the agriculture income tax, 83% said it should be taxed, 12% said no, whilst 5% remained neutral.

About abolishing the local taxes ( Zila and Octroi), 76% agreed that it was a good decision, 17% said don’t know, whilst 7% said no.

About the mini budgets, 87% agreed that mini budgets are likely to come in the near future, 5% said no, and 8% said don’t know.

To a questions about the education, 88% said more money should be allocated in the present budget for education, 7 % said money should be less, 2% said seemed ok, whilst 3 % remained neutral.

About the Y2K problem

About the awareness of the Y2K problem in Pakistan, 52% ranked it low, 34% said medium, 5 % ranked it high, and 9% said don’t know.

About the impact of Y2K problem to their business, 48% said it would affect their business to some extent, 42% saw no impact, 10% said don’t know.

To check the Y2K bug, 68% said their organization was doing enough to check it, 10% said they are not ready yet, whilst 22% remained neutral.

Lastly, asked if the government was doing enough to warn the public and businesses about the Y2K bug, 62% said no, 24% said yes, whilst 14% remained neutral.

Views of the executives

a) Main causes of dismal performance of the economy

Having dealt with the closed-ended questions, the survey also provided an opportunity to the executives to share their feelings with us.

The views gathered during the survey were almost similar to what we had gathered in SZABIST’s first survey of Pakistan’s economy, commissioned in 1998.

The executives interviewed had strong feelings for the country and therefore were very critical about the way things were looking bleak. Majority of the respondents suggested that the principal causes of continuous dismal performance of the economy, were corruption, government’s poor decision making, political instability, bad governance, lax financial system, increasing dependency on the IMF and World Bank, and ephemeral economic policies aimed at solving short term problems.

b) Proposed Important Remedies: The attitudes uncovered by our survey suggest considerable worry over corruption and the way country’s political system is running. Majority of the people surveyed were of the view that the country’s economic situation is so bad that it cannot be corrected within few months because it seems that every segment of the society has been corrupt. They suggested that a minimum of 10 years’ period be isolated for a government of technocrats in which the best people are extracted from every sector of the economy so that the recovery could kick-start.

Some of the executives said wheels of Pakistan’s economy should be steer away from the IMF/ World Bank. They further suggested that the government’s economic policies should be goal oriented, consistent, and run over a longer period of time. And to cement public’s confidence, the government must not hide true facts and figures about the health of Pakistan’s economy. Moreover, media should also be made free from political patronage and it should report what stands true.

A general feeling, gathered during the survey, was that executives were worry over the deteriorating standard of education in the country. They said that more work needed to be done in this regard. Executives seemed pretty sensitive about taxing the agriculture income and limiting the role of bureaucracy. Interestingly, they also raised their eyebrow about disciplining the politicians.

Coming to the Y2K awareness problem, they suggested that the government must increase its activities in this area and that this issue must not be taken lightly.

The people surveyed however, showed confidence that Pakistan has got enormous resources, but these need sound management and harnessing.

Compiled by: Syed Asad Hussain (Senior Faculty Member, SZABIST).