Recent reports in the western media indicate that Pakistan needs as much as $10 billion to avoid an economic meltdown.
and:
Pakistan’s foreign currency reserves are falling fast and if forward liabilities are included, the real reserves may go down to $3 billion. This cannot meet the import bill of one whole month.
Out of total reserves of $8.467 billion, the reserves held by the commercial banks stood at $3.461 billion on September 23. From September 22, the reserves fell by around $180 million, as there were no receipts while the government made heavy payments for oil and other imports.
This week, Moody’s Investors Service lowered Pakistan’s credit outlook to negative due to the risk of “missed repayments” on the nation’s debt.
Pakistan’s gradual economic decline, which started last year, alarmed the United States and Britain as they feared that financial chaos could allow terrorists to deepen their roots in the country.
To avoid such an eventuality, they decided to launch a new group of donors.
Read more about our dismal state here:
‘Friends’ unveil initiative to avert collapse: Over $15bn needed: media
It is interesting to note that former President Musharraf inherited a far more fledgling Pakistan in 1999, a Pakistan which was on the verge of being declared a terrorist, bankrupt and a failed state. Musharraf inherited a Pakistan which had less than a billion dollars as foreign reserves, with an economy the mere size of $75 billion, and with 65% of our GDP used for debt servicing. Although currently our economy is fast deteriorating due to the incompetency of the new regime (who looted Pakistan in the past), the situation in 1999 was FAR WORSE than what it is now.
And despite not receiving the above level of support and commitment from the international community, Musharraf and his team were still able to deliver, with Pakistan’s situation improving prior to September 11, 2001. For example:
Pakistan’s foreign reserves had risen up to $3.2 billion by September 10 2001. To quote Dr. Ishrat Husain:
“In 1999, the ratio of foreign reserves held by India was 40 times that of Pakistan. By June 2002 this ratio has declined to 8 times while the size of Indian economy is about 6 to 7 times that of Pakistan.”
Dr. Ishrat Husain goes on to say:
“It may be relevant to point out that the biggest quantum jump in our reserves had taken place between July 2000 and June 2001 i.e. well before September 2001. During this one year period the reserves increased by 138 percent to $ 3.1 billion. The rate of increase during July 2001 and June 2002 was 105 percent.”
Consider the improvement of a variety of indicators prior to September 11 2001. We read:
“While acknowledging the salutary impact of the external account improvement, however, it is worth stressing that the trend improvement was visible well before the seminal September 11 events. Interest rates were already on the way down; foreign currency reserves were edging up; the exchange rate was relatively stable; the inflation downtrend was well defined, and the government’s continuing fiscal discipline and commitment to reforms had already set the stage for the IMF PRGF, and the subsequent re-profiling of external debt. Nonetheless, the pre-existing positive trends did gain invaluable momentum in FY02, post-September 11. However, despite these major positives, the economy was not unscathed in FY02.”
Finally, to cite Afreen Baig:
“… let it be clarified that major economic indicators had improved before 9/11, and the economy had already started showing signs of recovery and revival.
In that SHORT span of 2 years BEFORE 9/11, Pakistan’s revenue increased from Rs.308 billion to become Rs.395 billion. Exports increased from $7.5 billion to become $9.2 billion. Foreign Reserves increased from $ 1 billion to become $3.25 billion. Debt servicing as a ratio to Revenue decreased from 65% to 57%. Public and external debt as a percentage to Foreign exchange earnings declined from 300% to 250%. Current account deficit decreased from $2.4 billion to become $510 million. And, Pakistan’s large-scale manufacturing grew by 11% in June 2001 against 3.5% in 1998. These facts should set aside the skeptical grumblers.”
It is quite true, however, that after September 11 2001, Pakistan’s economy further flourished. But this did not occur purely on the basis of aid from the international community but due to the wits of the managers of Pakistan at the time.
Consider the current situation. Despite its deterioration, the present economy is still much larger and stronger than the one we had in 1999. And yet the new regime is unable to manage it. They are reduced to the point of begging the international world for aid and donations!
This also reminds us of the sheer hypocrisy and double standard of our media. The Pakistani media played a pivotal role in spreading the lie that whatever economic improvements we witnessed under Musharraf were largely or purely due to the aid which Pakistan received from, say, the U.S. This disinformation was used as an argument against the Musharraf government. And while now we have the new regime OPENLY BEGGING THE INTERNATIONAL COMMUNITY FOR AID, the media seems not to be interested to use this as a point of criticism against the PPPP government. Why?
Members of the new regime often claim that they “inherited” a poor economy. But this is an outright lie. Why under Musharraf foreign reserves reached the $17 billion mark? How was the rupee relatively stable under Musharraf? How was the economy increasing at the rate of over 6% annually under Musharraf? How on earth did a mere $75 billion economy more than doubled in less than a decade’s time under Musharraf? Why oh why did Moody give Pakistan a higher rating under Musharraf? Thus, in fact, the new regime inherited the best economy any government in Pakistan has ever inherited. True, things were not 100% fine and dandy, but neither was the situation utterly hopeless. The problems which existed could have been properly managed. Instead, manageable problems quickly became utterly uncontrollable within months after the elections. [For the economic achievements of the Musharraf government, please see the articles here.]
Too much time was wasted on irrelevant issues at the expense of the economy. The economy also suffered immensely when Ishaq Dar, probably the worst Pakistani on the planet, made a series of irresponsible statements about the state of the Pakistan economy after becoming finance minister, as a result of which Moody’s immediately downgraded Pakistan’s ratings and investors began flying out of Pakistan at the speed of light. Ishaq Dar is the same despicable character who played a key role in destroying Pakistan’s economy in the 1990’s under the PML-N government. This time around he caused immense damage to Pakistan through his factually erroneous and irresponsible statements within days of assuming office!
Unfortunately, it appears we are fast going back in time to the 1990’s era, when the PPP and the PML-N destroyed Pakistan’s economy and spent most of their time — besides conducting criminal activities — begging other nations for aid and loans, which they then misused. While I feel sorry about the state of the Pakistan economy, a part of me also feels that the Pakistani people, at least the ones who voted for these monstrous PPPP and PML-N candidates, deserve this. It is not as if these voters knew nothing about the gory past of these parties. We all knew full well how the two parties looted Pakistan in the past and committed wide scale corruption, almost destroying the nation. I am surprised even if a moron expected these ghastly characters to have done something new or different this time around.
You reap what you sow.
++++++++
© Musharraf Supporters 2008 All rights reserved
Recent Comments