23RD MARCH—THE DAY OF
SHABBIR H. KAZMI
Mar 25 - 31, 2002
This year, Pakistan Day celebrations are being held
with a new spirit. In the post September 2001 era, Pakistan has
emerged with a new identity offering enormous opportunities as well as
challenges. Many international lenders who were skeptical about the
economic revival plan, presented by the present economic managers,
when they assumed power, acknowledge that they (critics) were wrong.
The fact has been recognized at the recently organized conference of
International Chamber of Commerce. Presence of a large number of
foreign delegates and officials was a clear indication that Pakistan
was being explored as a major destination for foreign direct
investment. However, it is also a fact that observers are keenly
monitoring the process of restoration of democracy in the country.
The September 11 incident and following events have
brought a drastic change in the attitude of people and governments.
Therefore, it is also necessary that, we the Pakistanis, should take
into account what they have gained and/or lost over the five decades.
It is the most appropriate time to elucidate the objective for which
thousands of people laid down their lives. On this day the Muslims
pledged to start a movement for an independent country, free from all
types of exploitation.
However, when one looks at the history spread over
five decades, two facts are established. First, that India never
accepted division of the sub-continent. India not only imposed wars on
Pakistan but also patronized anti-state activities in Pakistan.
Second, that the successive governments implemented short-term plans
to attain political mileage. The war hysteria prevailing in both the
countries led to accumulation of arsenals at the cost of deprivation
of their population. Lack of continuity of policies in Pakistan
resulted in not only very low economic growth rate but widen the
disparity gap between haves and havenots.
If one explores the reasons for disintegration of
the USSR, it is also evident that a huge quantity of armaments,
including those equipped with atomic war-heads, could not stop its
splitting into small states. Though, most of us are proud of Pakistan
having acquired atomic capabilities, must keep in mind that this power
alone cannot guarantee the sovereignty of the country. In present
time, the best defence against all types of aggressions is strong and
A point of satisfaction is that since the present
economic managers have assumed power, efforts are being made to
address the key issues. They have, at least, two points on their
credit — recovery of non-performing loans and successful
re-profiling of Pakistan's external debt. While the first factor has
strengthened the local financial system, the second has brought debt
servicing to a sustainable level. The positive impact of, both the
factors put together, is that the country will not be forced to borrow
more to pay off its debt but will be able to spend more on development
projects. Greater spending on development projects not only have a
snow-ball affect on the economy but also paves way for industrial
Those who are still skeptical about the
achievements must accept that Pakistan has joined the main stream of
international community of nations. Its external debt has been
re-profiled. Foreign investors who had written off Pakistan, at one
time, are now actively considering it as the destination for their
investment. However, it should also be kept in mind that once again
deteriorating law and order situation has become a serious impediment.
Some analysts say that the present wave of killing is being sponsored
and proliferated by those who want to destabilize Pakistan.
SBP QUARTERLY REPORT
The second quarter report of State Bank of Pakistan
(SBP) has been received with mixed feelings. The pessimistic analysts
say, "No signs of improvement". Whereas people having
optimistic attitude term the performance, "Above satisfactory
level in the prevailing circumstances". While the world is going
through synchronized recession, due to shrinking purchasing power, the
overall performance of Pakistan's economy cannot be termed
There has been drastic improvement in balance of
payment. Current account shows surplus of US$ 1.27 billion as against
a deficit of US$ 262 million for the corresponding period of year
2000. Forex reserves increased from US$ 3.2 billion in June to US$ 4.8
billion in December 2001. The other eye-catching facts are, a 2.5 per
cent growth in agriculture sector and 2.9 per cent growth in large
scale manufacturing sector. However, collection of taxes at Rs 174.5
billion and non-tax revenues fall short of target. Even this should
not be considered disappointing because of 9.8 per cent fall in
import, the main source of tax.
Although, Pakistan posted current account surplus
in year 2000-2001, it was primarily driven by purchases from the curb
market and change in the accounting treatment of Saudi Oil facility.
In contrast, the upturn in July-December was broad-based as all
subcategories of the current account showed marked improvement. In
effect, excluding inflows under official transfers, the current
account showed a surplus of US$ 335 million as against a deficit of
US$ 744 million for the corresponding period of last year. Trade
deficit reduced to US$ 48 million, showing a contraction of US$ 718
million. This was mainly due to reduction in oil import bill.
Exports amounted to US$ 4.5 billion, as against a
target of US$ 5.05 billion. The shortfall can be attributed to global
economic slow down and particularly in the major markets for Pakistani
products. Maintaining the last year's export level, with just a small
decline of less than half a per cent, is itself a significant
achievement. However, it is necessary to note that despite moderate to
impressive quantitative increase over last year there was
deterioration in unit price realization.
Imports amounted to US$ 4.87 billion, registering a
99.6 per cent decline. POL import bill registered a significant
reduction of US$ 493 million. Import of machinery except textile, has
been declining over the years. Continuation of BMR in textile industry
resulted in import of machinery worth U$ 233 million, showing an
increase of over 42 per cent.
Agriculture sector was the most important
determinant of overall growth. However, looming specter of drought
continue to haunt farming activities. In the current fiscal year, some
shift occurred from rice