ECONOMIC PERFORMANCE: A REVIEW
The rational for all economic changes in the final analysis is the well being of the people at large
From SHAMIM A. RIZVI,
Dec 08 - 14, 2003
Reviewing the Economic progress during the first year of elected government, the Finance Minister, Shaukat Aziz claimed that the country's economy has made considerable progress during the last one year.
Explaining the salient features of economic performance during this period, Finance Minister said that one year growth figures bode well for surpassing 5.5 percent GDP growth rate in 2003 against target if 5.1 percent. "We may touch 6 percent growth rate during the current financial year ending June 2004", he added.
He claimed that the inflation rate is under control and country's foreign exchange reserves are touching an all time high figure of $ 12 million. The government has been controlling the expenditure side to save and divert the same resources for development program. The IMF Poverty Reduction and growth facility program is going to expire soon and government has indicated to the fund that it was not interested in further extension as the loans under this program carry a higher rate of interest. The Finance Minister said that the Economic reform agenda of General Pervez Musharraf is continuing uninterrupted. The government is facing no resistance from any side as the results of these reforms obvious and encouraging. These reforms have provided the base strength to the country's economy enabling us to refuse foreign loans, he added.
The Finance Minister claimed that during the first quarters of the current fiscal all target set earlier have been surpassed. Revenue collection is up by about 9 percent exports by about 12 percent and import by about 10 percent. Recent exhortation in large scale manufacturing sector and exported growth in agriculture sector gave confidence to the policy makers to declare that in the next 2 years 6 percent GDP growth rate will be achieved. The Minister compared the performance of Key Economic indicators on three counts, one of the last fiscal year 2002-2003, the present government's one year and first smooth of the current fiscal to prove his point. Higher growth is achievable because of excellent performance of industrial sector and improved water supply for irrigation which would improve agriculture sector's growth, he said adding that availability of consumer financing has generated a strong consumer demand and this indicated the emergence of a strong middle class in the country.
Continuing the Finance Minister said that if we succeed in attaining 6 per GDP growth rate by June 2004 and sustain it for 2/3 years more, it would definitely lead to poverty reduction. Admitting that so far there has been no visible fall in the poverty level, Shaukat Aziz said that it will be possible only after few years sustained growth rate of 6 percent and above. He said that with increased government spending through Public Sector Development Programme (PSDP) to Rs. 160 billion this year against 136 last year will create more jobs and help in reducing poverty. He said that 60 percent of PSDP this year would be spent on infrastructure that include Roads, Water and Power, 21 percent for social sectors with focus on other sectors. The Government will keep construction on top priority as it is labour intensive and create more job.
Responding to the questions by the newsmen, the Minister also admitted that direct foreign investment and remittance have also declined but he hoped to make up the losses during the remaining six months of the current fiscal.
It was perhaps a moment of truth for Finance Minister, when he maintained that Pakistan could not overcome the challenges of poverty reduction, increase in investment level and creation of employment opportunities despite macroeconomic stability. This is the first time that such an important government official has publicly accepted the government failure in its well-pronounced goals at the conclusion of one-year of the Jamali-led government are extension of the earlier policies, it can be inferred safely that while the last four years saw considerable improvement in the macroeconomic stability of the government, they fell short of seeing any tangible improvement at the popular level. It is in fact a failure in the achievement of the ultimate goal as the rational for all economic changes in the final analysis is the well being of the people at large.
In spite of strong rationale for tackling poverty through direct programmes, a closer look would reveal that the lack of investment, as all other programmes of tackling poverty through direct programmes will remain limited in domain and can hardly encompass all the impoverished people of the country. It is, therefore, prudent that facilitation of domestic and foreign investment in the country should remain pivotal to economic decision making in the country. As the private domestic and foreign investors feel shy, it is high time that the government should take the lead and bring about significant increase in its development expenditure. The housing sector has rightly been classified as an area of investment and the policies should continue in future as well. Once the effects of government policies started yielding results, the level of investment by private sector will rise as well and hence the unemployment and poverty could be tackled.