The contrasting truths of Pakistan's economic success
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Pakistan's new budget for the coming financial year which is due to be presented on June 5 has prompted a sharp divide between supporters and critics of the country's economic direction.
The government of General Pervez Musharraf, Pakistan's military ruler, is keen to continue patting itself on the back for overseeing what it says is a significant economic turnaround. Pakistan's liquid foreign currency reserves have never been healthier, economic growth rates have never been as high as they are today and recovery across various sectors of the economy generally remains robust, goes the official argument. Critics are quick to note the official view is nothing but a figment of imagination, essentially driven by a penchant for consistently seeking the proverbial glass to be half full as opposed to more than half empty. The truth, as always, must lie somewhere in the middle. Pakistan is indeed no-where near its situation of the 1990s when the country teetered on the brink of collapse, living near the prospect of facing its first ever foreign debt default. Its also true that a number of industrial and business sectors are indeed now reporting significantly higher profits than ever before, mainly as output continuing to rise with the passage of time. But then, Pakistan also sees signs of what appears to be an overheated economy while questions continue over the extent to which the fruits of its economic recovery have made the difference for the country's ordinary citizens. The past year has consistently seen never-ending public complaints over rising inflation. At the same time, the international trade deficit has risen sharply, driven up partially by the increasing demand for petroleum from industries which have stepped up their outputs. But perhaps most distressing of all is the prevalence of poverty. The government now claims that the proportion of Pakistanis living below the poverty line has fallen from at least a third of the country's population of about 160 million a few years ago, to about a quarter of the population who now live below the poverty line. For the population at large, the twin factors of a popular outcry against inflation and poverty, have together emerged as the most fundamental economic issues around Pakistan's budget time. For many Pakistanis, recovery across key economic indicators is of little consequence to the lives of ordinary Pakistanis. Once again, Pakistan is witnessing what many other developing countries have witnessed before. The absence of strong structures of government and an overall weak political system must essentially undermine the capacity of the government to oversee the trickling down of the fruits of economic success from a macro level to the grass roots of society. The budget is also politically significant as it comes ahead of national elections planned for next year. Typically, pre-election budgets force governments to shy away from tough decisions and entertain idea built around profligate spending, all to create a proverbial 'political effect' of the economy. The early reviews put out recently by Pakistan's leading brokerage houses suggest that the budget would be promoted as 'business friendly' initiative which is meant to promote an environment largely conducive for investors. Gulf News |
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