Pakistans economy put on higher growth trajectory due to multi faceted reforms: Musharraf
Business Friday, December 7th, 2007President Pervez Musharraf on Thursday said Pakistan’s economy, which was in shambles before the October 1999, has been put on the path of higher growth trajectory through a multi-faceted reforms strategy conceived and implemented over the last eight years.
“We were about to be declared as a failed and defaulted state in 1999 in contrast to what we have achieved now. Our kitty was empty and the foreign exchange reserves were not even enough to finance the external payments for two weeks. Standards & Poors and Moodies – world credit rating agencies – had put Pakistan in the selective default grade”, he said while speaking in a weekly special PTV programme ‘Aiwan-e-Sadr Sey’.
The President, during this weeks programme titled “Pakistan’s economic landscape – past and the present”, spoke at length on each and every aspect of the economy ranging from economic growth to fiscal discipline, debt management, revenue collection, foreign direct investment, balance of payment, per capita income and banking sector reforms etc.
He said it was owing to the economic reforms strategy followed over the last eight years that the country’s GDP (Gross Domestic Product) which was US $ 63 billion in 1999 has now reached US $ 162 billion, with GDP growing at an average of 7 percent for the last four years, per capita income increased to $ 925 from $ 435 and debt to GDP ratio coming down from 101% in 1999 to 54% at present.
The President further informed that the revenue collection which was at around Rs 300 billion in 1999 has crossed a record Rs one trillion, creating more fiscal space for development expenditures as allocations under the Public Sector Development Programme (PSDP) which hovered around Rs. 80 billion during 1988-99 period have reached Rs. 520 billion this year.
Similarly, he said, owing to the prudent economic polices over the last eight years the Foreign Direct Investment (FDI) which was around $ 300 million in 1999 has now peaked at $ 6.5 billion, with remittances reaching $ 5.5 billion, exports at $ 17 billion – up from $ 9 billion, imports at $ 26 to 27 billion, forex reserves at around $ 16 billion, Karachi Stock Exchange (KSE) index raising to 14,000 points at present from 1000 in 1999 and exchange rate stable.
President Musharraf said Pakistan was suffering from debt and investment dilemma in 1999, as the foreign investors were shying from the country due to its poor economic fundamentals.
He said the first and foremost challenge before him after he took control of the country’s affairs in 1999 was to check the higher fiscal deficit – gap in income and expenditures, which was mainly due to high public expenditures and haemorrhaging of funds.
The President said the government then started the process of privatizing the public sector institutions, most of which were running in losses and the government had to inject billions of rupees every year to the public sector institutions like UBL, Rice Corporation of National Shipping Corporation etc.
He said in order to check the gap between income and expenditures the government not only resorted to lesson the cost of running the government and curb haemorrhaging but also introduced the CBR reforms and documentation of the economy to enhance the much needed revenue and capitalize the true potential.
The President said main focus of the CBR reforms was to minimize the contact between tax-payers and the tax-men and eliminate the discretionary powers of the tax officers.
He said these reforms worked and the revenue collection which had reached only Rs. 306 billion from 1947 to 1999 was now set to cross Rs. trillion figure and the fiscal deficit has been reduced to around 4 percent as against around 10 percent in the decade of 1990s.
Similarly, the President said the current account deficit, which used to be around $ 5 to 6 billion per annum due to higher debt servicing, was now in surplus of $ 2 billion for the first time in the country’s history due to economic turn-around achieved through prudent management.
He said the country’s position in terms of rich-poor disparity has also improved a lot during the last few years, as according to a World Bank report, Pakistan at 29.8 percent rich-poor disparity was among the best three states in contrast with Brazil 58 percent, Malaysia 49.2 percent, China 41.7 percent, USA 48.7 percent and India 32.1 percent.
President Pervez Musharraf said, Pakistan’s external debt in terms of Debt to Foreign Exchange earnings ratio has registered a significant decline from 347 percent in 1999 to 122 percent at present.
About privatization, he said, it was due to this policy that the privatization of 25 percent government stake in UBL this year fetched $ 750 million, as against $ 210 million secured through the sale of 50 percent shares in 2002 when it was running in the public sector.
The President said it was only due to the economic turn-around achieved over the past few years that Pakistan took a historic exit from the IMF programme in December 2004 and even did not accepted the scheduled grant of $ 270 million.
To a question, the President said that government was mindful of the water needs and focusing on the increased availability of water for agriculture through various measures.
He mentioned the Mangla Dam raising at a cost of Rs. 50 billion – which would increase 2.1 million acre feet of water -, Rs. 66 billion project of brick-lining of water courses across the country, and the initiation of Bhasha and Subakzai dams and said all these measures are to increase the availability of water.
The President agreed that construction of Kalabagh Dam was essential to meet the country’s future water and energy requirements, adding, but it has become a political issue.
To another question about the negative perception of Pakistan abroad, the President said it was mainly due to terrorism and extremism, which we are fighting and have to fight to correct such perception.
He, however, added that some people are often in the habit of projecting the negative things rather than showing the positive aspect. “There are problems but there also good things in Pakistan. If there is half glass empty then there is also half glass full. Please see the half full glass as well”, he remarked.
The President said the media, business community and the Pakistan community abroad can play an important role in projecting the country’s true image.
To a question, he said, the allocation of agricultural loans by the banks including the ZTBL has increased from Rs. 30 billion in 1999 to Rs. 160 billion this year.
The President told a questioner that the purchasing power in Pakistan has increased a lot, with minimum wages which were Rs. 1500 in 1999 are now Rs. 4600, a fact also supported by the increased sales of consumer items in the country, particularly in rural areas, as well as the number of cell phone users hitting 60 million.
He also mentioned the continuous raise in salaries of government servants over the last few years, adding, however, still there were around 25 percent population living below the poverty line and “we have to take measures to check poverty.”
To another question, the President said he believed in the independence of media, adding, “we must have independent but responsible media.”
Asked about the Reconstruction Opportunities Zones (ROZs) in tribal areas, he said, it was part of the government’s multi-pronged strategy to deal with the situation in tribal areas with a mix of military, political and socio-economic development measures.
He said under the strategy a huge amount of Rs. 16-17 billion will be spent in FATA per annum including $ 150 million to be provided under the ROZs project.
The President said due to the successful military action against miscreants in the settled areas of NWFP including Swat, Tank and Shangla the situation was fast returning to normal.
To a question, the President said, the government was taking all possible measures to meet the country’s fast growing energy requirements and utilizing all channels including hydro-electricity generation, nuclear, wind and gas.
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on Dec 7 2007. Filed under