Improved economic indicators have failed to bring about any improvement on the quality of life of common man


Apr 12 - 18, 2004





Let us hope that the assurance of the Finance Minister made to the nation last week that the year 2004 will be year of the common man will hold good, at least to some extent, as the year 2003 has been a year of added miseries for the poor masses. During the year 2003 the common man has suffered from inconsistent increases in the prices of essential commodities, paucity of jobs and ever-rising poverty.

Addressing a seminar the Finance Minister Shaukat Aziz, besides giving new hope to the common man made some bold and positive statements. He said that Pakistan will say goodbye to IMF this year, as a nation Pakistan will no longer live in 'Kashkol' culture. He made the announcement while speaking at the foundation-stone laying ceremony for Aiwan-i-Quaid complex in Fatima Jinnah Park in Islamabad. He said that the country is very close to the realization of Quaid-i-Azam's dream of a strong, prosperous and enlightened Pakistan.

It's really heartening that Pakistan is today in a position to throw away the shackles of IMF as well as the begging bowl culture, which had unfortunately overtaken the country over the years due to the financial constraints emerging from negative economic policies of the BB and MNS regimes. A patriotic Pakistani obviously feels elevated with the swelling kitty both with foreign exchange and Pak rupee. The 12 and a half billion dollar foreign exchange reserves, increase in revenue generation, boost in exports and improvement in per capita income are obviously an encouraging scenario for the people of Pakistan.

However, no one, including the Finance Minister can deny the fact that all these improved economic indicators have failed to bring about any improvement on the quality of life of common man. Rather his miseries have multiplied during the last few year. The prices of kitchen items, medicines and transport expenses along with joblessness has brought poverty level to an alarming point.

After achieving macro-economic stability, the country's economic planners will need to re-order some of the development priorities. For instance greater social well being of the population should move up on the agenda of second-generation reforms. It will not be enough to make larger allocations for social sector development but the delivery of social services will need to be substantially improved. The central bank governor has recently pointed out that capacity building and private-public community partnerships would be promoted to strengthen the local government institutions assigned the task for the delivery of these services. It has already been decided that investment and pro-poor growth will be the focus of attention in the forthcoming budget.



While employment generation and poverty reduction should continue to receive focused attention, it is also necessary that surcharges on electricity, gas and petroleum products should be reduced through improving the governance of utilities. Tax burden on the poor needs to be reduced and higher taxes levied on conspicuous consumption. Revenue has posted 15 percent growth this year and this trend is expected to continue as the economy moves towards higher growth. The reduction in losses incurred by public sector enterprises will reduce unproductive expenditure. Debt servicing will also be further reduced. It has also been suggested that bank credit should be made available to the poor and middle class segments of the society in larger measure. This will stimulate economic growth and open opportunities for self-employment.

During the recently held three-day meeting of Pakistan Development Forum, it was rightly emphasized that infrastructure will need to be developed in order to accelerate economic growth from the next financial year. At the same time, it is also necessary that the cost of doing business should be reduced as far as possible. The need to develop human development indicators was also emphasized on this occasion. The resources available to the government are expected to go largely for the promotion of pro-poor growth, infrastructure and social sector development. Budget deficit will be further reduced, as more fiscal space could be available to the government.

While budget numbers are important, the strategy behind it is all the more so. During the next financial year, WTO regime will go into operation exposing the economy to greater international competition. That will bring the challenge to compete in that market-oriented environment. Another important event will be that the ongoing programme with the IMF will be completed. Thus the next financial year will be one of new challenges and new opportunities. The essence of the fiscal policy could be sustaining macro-economic stability, acceleration of investment and growth, building up infrastructure and social sector development.