PAKISTAN IN NEED OF A SELFLESS VISIONARY
The economy of a country is true indicator of how well a country is functioning in the global world and particularly various indicators which shows that whether the country is growing or it is at a stagnant point. From the worldwide assessment this is very obvious even for the 1st grade students that the western countries have successively developed economies while on the other hand when we see at the eastern side most of the countries are still developing except for the Asian tigers and some others. Then inside these developing economies there are different levels some of them are rapidly growing while some are growing at a snails pace with their dependence on donor friend’s assistance.Pakistan stands in the line of developing countries which has enormous resources (most of them are yet to be discovered). Despite being a poor country in the beginning i.e. 1947 its growth rate was far better than the global average but the reckless policies have led to slow down its growth rate in late 1990’s.Later on by introducing various economic reforms they help accelerating the economy whose result can be seen in 2004-2005 that the growth rate was 8.4% which was remarkable and fastest in the region. But being a part of the world economy it is of no wonder and not possible to escape from any business cycles prevailing in the world and especially when Pakistan is one of the important economies of the world and attains an important geographical location.
This has resulted in the slow down of the growth rate due to the economic crisis of 2008 which led the growth rate to fall from 8.4% to 4.7% along with an ever high inflation rate of 24.4% and a low saving rates and other economic factors, continue to make it difficult to sustain a high growth rate. These economic crises have resulted in taking an aid of more than $100 billion from the international monetary fund to avoid bankruptcy because the donor countries were suffering from financial crisis themselves. Bankruptcy was in its way to operate in Pakistan because of balance of payments deficits. Another reason for this bankruptcy was that the country was spending $26 billion in an expectation to receive the revenues up to $20 billion.
Alongside this the exports show negative trend with an increase in imports. All this resulted in current account deficit. And this was for the first time in time that Pakistan has to take this funding to support its balance of payments deficit. But by October 2007 Pakistan raised its foreign reserves to $16.4 billion. Exceptional policies kept Pakistan’s trade deficit controlled at $13 billion, exports boomed to $18 billion, revenue generation increased to become $13 billion and attracted foreign investment of $8.4 billion. But unfortunately in the start of 2008 the country’s role against the terrorism led to instability resulting in the great decline in FDI from $18 billion to $3.5 billion. Then Pakistan’s debt position became minus due to political instability.
The political instability has always been a fundamental instrument playing its role in Pakistan’s economy to destabilize it. As we can see from the pages of history that as soon a political party takes its position it is uprooted by external forces either by leader’s assassination or by other strategies which end up in imposing martial laws which lead to the stagnation of the economy. This kind of outlook of a country results on the part of foreign investments, hesitation. No one would like to invest in such circumstances where there is a fear that the country would default. Political and economic stability are complements but if we see the case of Pakistan then it is of quite astonishment that both of them are in crisis. Due to these instabilities the GDP has retarded since 2004-2005. This results in the circular debt which is another chronic issue and shows a potential indicator of economic problem.
The government of Pakistan is unable to pay to oil marketing companies and independent power producers which affected both the private and the public sector and led to the shut down of many businesses. The country is facing a shortage of 35000 MW where the per capita consumption is only 15MMBtu against the world average of 68MMBtu and there is a need to increase this level up to 50% of the world level and there should be made the energy availability through other sources like mega wind power projects, bio diesel, bio gas projects and small hydro projects. These indicators have so far shown a fragile economic potential on the part of Pakistan which needed to be strengthen in order to survive in this world. Pakistan although shows a weak economy all together but there are enormous resources that if being utilized efficiently with stable political atmosphere Pakistan will become a strong economy.
Here are some economic indicators with reference to time and their growth path have been shown to analyze by looking at the figures that at what pace the economy has grown over time.
The table is as follows:
|
Indicator
|
1999
|
2007
|
2008
|
2009
|
|
GDP
|
$ 75 billion
|
$ 160 billion
|
$ 168 billion
|
$ 185 billion
|
|
GDP Purchasing Power Parity (PPP)
|
$ 270 billion
|
$ 475.5 billion
|
$ 439 billion
|
$ 580.6 billion
|
|
GDP per Capita Income
|
$ 450
|
$ 925
|
$1085
|
$1250
|
|
Revenue collection
|
Rs. 305 billion
|
Rs. 708 billion
|
Rs. 990 billion
|
Rs. 1.05 trillion
|
|
Foreign reserves
|
$ 700 million
|
$ 16.4 billion
|
$ 10 billion
|
$ 14 billion
|
|
Exports
|
$ 7.5 billion
|
$ 18.5 billion
|
$ 19.22 billion
|
$ 18.45 billion
|
|
Textile Exports
|
$ 5.5 billion
|
$ 11.2 billion
|
-
|
-
|
|
KHI stock exchange (100-Index)
|
$ 5 billion at 700 points
|
$ 75 billion at 14,000 points
|
$ 56 billion at 9,000 points
|
|
|
Foreign Direct Investment
|
$ 1 billion
|
$ 8.4 billion
|
$ 5.19 billion
|
$ 4.6 billion
|
|
Debt servicing
|
65% of GDP
|
26% of GDP
|
-
|
-
|
|
Poverty level
|
34%
|
24%
|
-
|
-
|
|
Literacy rate
|
45%
|
53%
|
-
|
-
|
|
Development programs
|
Rs. 80 billion
|
Rs. 520 billion
|
Rs. 549.7 billion
|
Rs. 880 billion
|
By looking at the table we have seen that over a decade’s time all the indicators have doubled showing a positive increment. So at this point it would be unfair to look at only one side of the picture only at the disabilities or draw backs but also at the potentiality that the country possesses. Due to the introduction of many different and result oriented policies, they accelerated the growth in many sectors including manufacturing, financial services, foreign exchange and hard currency reserves foreign debt has reduced and many more.
Pakistan is blessed with everything. The basic resources that the country requires to function in this world are possessed by our mother land that includes oil, gas, coal, gold, uranium etc. Basically the economic structure of the country have shifted from agriculture base to services which amounts to 53% of the GDP today while agriculture’s share in GDP has reduced to only 20%. This basic shift have given incentives to various investors outside the Pakistan and resulted in investment, in sectors like telecommunications, real estate, energy, textiles, chemical manufacture, iron and steel mills etc.
To start off with discussing the potential of Pakistan economy first in line are the resources. About 883 million barrels crude oil reserves have been discovered of which 559 million barrels have been produced. Further hydrocarbons endowment has been estimated at 27 billion barrels of oil and 282 trillion cubic feet of gas, out of which only 40-50 trillion has been discovered.
653 exploratory wells have been dig by various national and international companies and Pakistan can induce many other countries to invest in this sector. Further Pakistan is situated on three geographical plates i.e. India, Eurasian, and these plates collide in here and the area where they collide is rich in minerals. Tethyan magnetic arc also known as the golden arc for its gold potenitol starts from turkey to Euphrates to Iran to Baluchistan to Fata to NWFP to Kashmir, this shows that we endowed with great amounts of gold, uranium, silver, copper etc.
The main issue for the foreign investors in Pakistan is that there is not continuous availability of energy further the structure does not allow the efficient mobility of resources to the areas where they are needed. Pakistan was never short of energy, the energy crisis although have been created out of political jargon. If we see then Pakistan has the potential of 80000MWs just from wind power and 50000MWs from hydel power.
Further we can see that if we produce up to 100000 MWs just from the coal reserves for 40 years only 10% of coal will be used and question of solar energy is put aside as we know that, that can be used as well. From this one can point at the government that if Pakistan is possessed by so many minerals and resources then why this artificial shortages have been created. Why public is the only victim of this entire crisis.
More to see the nation’s monetary policies has also shown significant outcome which includes the reduction in interest rates, expansion in credit quantity, changing consumption and investment patterns.
Pakistan is also moving away from the import substitution which some developing countries (such as Iran) dogmatically pursued in the twentieth century. The Pakistani government is now pursuing an export-driven model of economic growth successfully. Government revenues have also increased with broadening of tax base, efficient collection of tax and privatization of public utilities.
Education serves as providing the human capital which is very essential from growth point of view. Pakistan has intense potential regarding education, and in that higher education. Intelligent and strategic investments in this area can result in thriving economy. The government of Pakistan has introduced different policies to enhance higher education by increasing the budget allocation up to 24%.Investment in this sector has also show positive outcome however more commitment in this sector is needed in order to enhance the growth potential of country.
Trade one of the important sectors and indicator for any economy is also playing an important role for the economy of Pakistan. Shifted from agriculture based trade to services and manufactured goods trade potential of Pakistan has seen to be strong. Since liberalization in international textile trade has yielded benefits for Pakistan and it aims at deriving benefits from economies of scale. Further trade potential of Pakistan can be seen that according to British deputy high commissioner and director UK trade and investment, they are foreseeing better economic and investment outlook in Pakistan and encouraging its companies to make investments here.
According to them ” British entrepreneurs working in Pakistan were having continued interest to work and safeguard their businesses and were looking forward to opportunities to further increase their operations by expanding existing projects and explore new avenues for investment”.
As we have seen such important indicators with relevance to Pakistan and have also analyzed how these sectors are working in here, we have come to the point that Pakistan has intensive potential in all its sectors and if these are utilized efficiently then no wonder that we as a nation will soon be considered as a developed and self sufficient.
Because this country of ours is blessed with so many blessings that even after big crisis they were not able to blow its economy and it still survived. But what after all these have led to such maldestruction and such backwardness and such fragile economy?
The answer to all this lies in the political jargon. The political situation of Pakistan is known to all of us that it has been facing tsunami all the time. The political ship of Pakistan is in a great whirlpool and to come out of that requires great efforts by the politicians. But what has restrained these politicians from doing efforts on their part? It is clear that the social evil of corruption is the top in hierarchy serving as the basic reason. From the top level to the bottom every one is racing with the other in the matter of earning more and more without even thinking for what they have appointed for i.e. serving the homeland.
Including corruption there is another base on which these servers rely on and that is the international pressure which the foreign forces put on Pakistan. Geographically as well as politically Pakistan has an imperative position which the external forces have valued and so they try to suppress the Pakistan economy so that it cannot be able to emerge as an independent state they put pressures.
Despite having all the natural resources, human power, physical capital and a strong international position, Pakistan is not able to emerge as a self independent state.
So What Pakistan needs is a radical new approach towards the economy. Including which is a freedom from international pressure so that the country can work according to its will and what is required by it. May ALLAH give us power and strength to achieve our goals and function as a prosperous nation (Ameen).
_________________________________________________________________________
Nida Raja is MSc Economics from Quaide Azam University Islamabad, presently doing her M Phil.
