Dr. Hasan Askari
There is a general agreement at the international level that stable economy holds the key to dealing effectively with internal social and economic challenges and external security problems. A good economy that ensures a secure future for people increases the capacity of the state to play an active role at the international level. A state will always face strong diplomatic pressures if it is heavily dependent on foreign loans, economic assistance, and it has declining exports.
There is a debate in Pakistan on the strengths and weaknesses of its economy and how far it affects Pakistan’s choices for foreign policy and domestic affairs. The official circles and the ruling PMLN express strong satisfaction on what they describe as an outstanding performance of the economy. They talk of the Vision 2025 and the China-Pakistan Economic Corridor to emphasize that Pakistan would in the next decade become one of the leading “emerging economies” of the world. The official circles argue that Pakistan has successfully completed the IMF Economic Restructuring Program and that the World Bank, the IMF and several important economic review groups appreciate the economic achievements of the Muslim League government. The growth of the economy at the end of the financial year in June 2017 is expected to be over 5 percent. The foreign exchange reserves with the State Bank of Pakistan and other Pakistan banks have exceeded 23 billion dollars.
This official Pakistani optimism about the Pakistan’s economic development is not shared by non-official and independent circles. They argue that Pakistan’s economic performance gets appreciation from the IMF and the World Bank because its government is running the economy in accordance with the guidelines given by these international financial institutions. If it diverts from their advisories, it will face their criticism. Further, the IMF also warns Pakistan of the hazards and risks in its economy.
The latest data released by the government of Pakistan shows that exports have been falling for the last several years. In 2012-13, Pakistan’s exports were $ 24.5 billion which declined to $ 20.8 billion at the end of the last financial year in June 2016. The remittances from Pakistanis based abroad declined by 2. 27 percent during July-December 2016. Pakistan’s total foreign debt is $ 73 billion at the beginning of January 2017 which has exceeded the approved higher limit of 60 per cent for the ratio between public debt and Gross Domestic Product. Pakistan’s total foreign exchange reserves amounted to $ 23.16 billion at the end of December 2016. However, in view of decline in exports, foreign remittances and foreign direct investment, the increase in foreign exchange reserves can be explained with reference to the loans available to Pakistan and the bonds floated by the PMLN government over the last three years.
If we analyze these two views of Pakistan’s economy, it can be argued that the economic development in Pakistan is imbalanced. Economic development is limited to some sectors of the economy. Its rewards have been limited to a small section of populace from the upper and ruling sections of population to the middle class. The people from the middle to the lower strata of the society have faced increased economic pressures and difficulties. Daily life for these people has become difficult because of price hike at the retail level in the shops for the food and other items that are needed for running a kitchen. Though Pakistan produces enough food for all population, all people do not get enough food for two meals a day. A good number of people go hungry or they have to rely on charity and voluntary meal distribution centers run by some people or organizations.
In Pakistan, the number of people who make over one hundred thousand Rupees a month has increased during the last ten years. The economic sectors that have experienced much expansion are banking, Information Technology, Telecommunication and real estate business, private sector education and private health care. However, for illiterate and half-literate Pakistanis, the job opportunities have not increased significantly. The industry has shown little expansion that could accommodate such people. Agriculture has also shown nominal progress during the last financial year.
Consequently, the gap between the rich and the poor sections of population has widened. The allocations for social and human development sectors are inadequate. The government run education and health care systems range from medium to low quality which has increased problems of the poor section of the population. All this is causing alienation among common people from the political system. Some of these people become vulnerable to extremist appeals.
The federal and the Punjab governments prefer to build glamorous and publicity oriented projects like motorways, modern bus service on selected routes and local trains which provide relief to a limited number of people. They also offer personalized favor programs to win over the loyalties of the selected populace. Therefore, the PMLN governments at the federal level and in the Punjab have announced several personalized favor-schemes like lap top distribution, Kissan package, Industrial relief package, scholarship schemes for the students in the name of the PMLN top leaders, the health care card scheme, provision of buses to schools in Islamabad and other favors that are distributed directly by the Prime Minister or Chief Minister Punjab.
The policy of personalized favor scheme and the government’s tolerance for corruption have given economic relief to some people. However, there is a need to have long term economic development projects that benefit all people and all regions. Greater attention will have to be given to overcoming economic inequality in the society and how to reduce Pakistan’s dependence on external loans and grants.