The present government,
despite facing many crises, has achieved much more in 30 months
From SHAMIM AHMED
June 03 - 09, 2002
Viewed dispassionately the overall performance of
the present government during the past about two and half years has
been more than satisfactory. As a matter of fact the present
government, despite facing many crises, has achieved much more in 30
months compared to any government in the recent past. The present
government may have failed to achieve desired results in many areas
but nobody can deny them the credit for more than satisfactory
performance in some other areas.
Unrealistically high expectations were awakened
after the dismissal of Nawaz Sharif government on Oct. 12, 1999 and
when then expectations remained unfulfilled, frustration set in.
People expected a revolution which has not taken place. The decline in
economy has certainly been checked but it has not taken a turn around
and the fruit of the improvement has not yet reached the common man.
The law and order situation has improved but the conditions are not
yet normal. Confidence is still to be restored. Two and half year ago
a ruthless accountability of corrupt holders of public offices, and
crack down on smugglers was on top of the agenda of Gen. Pervez
Musharraf, but this process has been slow while from a present
government people expected fast and swift action. At the same time,
however, it cannot be denied that it is for the first time in the
history of this country that the accountability process has been
initiated and action taken against prime ministers, former Chief
Ministers, Former Federal and Provincial Ministers, former Senior most
officers of the armed forces, former senior most civil service
officers, well-known businessmen, prominent landlords from all parts
of the federation. In fact for the first time this process has started
from the top-most to the lowest, including a Patwari.
The most testing time for Musharraf government came
when the world woke up to a different reality on Sept. 12. With the
international agenda shifting from nonproliferation to war on
terrorism, Islamabad found itself again in the spotlight playing a
role it had played before. Just as suddenly as the world priorities
changed, so did Pakistan's short of completely severing its ties with
the Taliban Regime, Islamabad had been supporting for the last six
years. Pakistan has all but taken a u-turn in its Afghan policy.
Finding itself between the proverbial devil and the deep sea, Pakistan
had few options not to go this way. The credit for putting Pakistan
once again on the world map in a position of respect and honour would
have to be given personally to President Pervez Musharraf. There is no
mystique to his qualities of leadership. It is simply honesty of
purpose, commitment to values, respect for what is good, rejection for
what is bad and the capacity to carry his colleagues with him through
thick and thin.
You may find the government wanting in many fields
put the improvement in economy is so significant that even the worst
critics of the present government cannot deny its achievement in this
sector. The Resident Director of Asian Development Bank (ADB) for
Pakistan, while speaking on Pakistan's economy at NIPA in Islamabad
last month said that "continuous increase in the inflow of ADB
financial assistance to Pakistan(from $500 million to 1 billion in 2
years) was a manifestation of Bank's confidence in the economic
policies of the present government.
There are not two opinions that the continued
fiscal deficit is the mother of all economic ills of the country.
Pakistan was suffering from twin deficit. In our international and
external accounts for the past about 20 years and instead of attacking
the root causes, we resorted to ad hoc measures of meeting the gaps in
our income and expenditure through borrowing both from domestic and
The deplorable state of economy was a result of
many years of economic mismanagement and imprudent economic policies
of the successive governments especially during the last 20 years,
without any exception, All of them passed their time with ad hock
measures obtaining fresh loans at a higher rate of interest to pay off
previously secured maturity loans. A time came by the year 1999 that
we spent over 73 per cent of our revenues on debt servicing, leaving
only 27 per cent for all other expenses, including defence. We had to
borrow from domestic sources to run the affairs of the State. As
enough borrowing was not available from our national saving, the State
resorted to bank borrowing using its power and authority. Excessive
borrowing by state adversely affected the liquidity of the commercial
banks, leaving little to advance as credit to the private sector.
Non-availability of adequate credit from banks slowed down the
economic activity and consequently the domestic investment declined.
Foreign and domestic investment are complementary
to each other and fall in domestic investment resulted in shrinking of
foreign investment. As a result unemployment increased and poverty
Economists agree on the point that the economy was
near collapse and default seemed imminent when the present government
took over. It took strong decision to change the cycle and initiated
various measures to start the healing process.
The wound is deep and it would take time to be
completely cured. The healing process has, however, started. The
strong reform measures taken by the government and specially the
recent happenings in the region the wake of September 11 and
Pakistan's bold and principled decision to join the world coalition,
has immensely enhanced Pakistan's acceptability in the world
community, leading to sympathetic appreciation of its problems and
genuine and sincere efforts of the government to make amends for the
past mistakes. This has opened new windows for Pakistan and it is
hoped that the country's economy will be on its feet in a few years
The significant improvement in the economy which
has been noted and fully appreciated by the donor agencies like World
Bank, IMF, IFC and the ADB can be judged from the following facts and
There has been no increase in the burden of foreign
debts during the last 21/2 years. It was $38 billion in 1999 and it is
the same today. (The total foreign debt stood at $43 billion in 1998,
including the frozen foreign currency accounts. It was brought down to
$38 billion by converting dollars into rupee accounts). Previously,
this burden was increasing by over $2.5 billion every year. It was $21
billion in 1990 and $43 billion in 1998.
Domestic borrowing, specially the bank borrowing,
has been reduced considerably.
The country today has a foreign exchange reserve of
over $5 billion (enough to meet over six months import requirements)
against $400 million in 1999 (hardly enough for two weeks).
As a result of drastic cut in state borrowing,
liquidity position of commercial banks has improved and they have
enough funds to advance loans/ credit to the private sector. This has
improved in domestic investment. Economic activity is picking up.
Foreign investors are also responding. There is
significant increase in foreign investments in certain sectors,
specially the oil and gas.
To meet the challenge of growing unemployment and
poverty alleviation, the government has launched a multi-pronged
strategy. The allocation of education, health, infrastructure like
roads, bridges, water reservoirs and other job-oriented projects has
never been so high in the history of Pakistan as during the current
year. Only last month the Executive Committee of National Economic
Council (ECNEC) approved 34 projects in public sector, involving an
expenditure of Rs. 229 billion, which is an all time record.
The economy has received some jolts as a result of
September 11 events. There is a shortfall of about Rs. 40 billion in
the estimated revenues, mainly because of fall in imports but these
losses will be made up by grants committed by the US and other
countries. Out of the total commitments of $1.5 million about $900
million have already been received and the rest is in the pipeline.