It146;s Pak Shining, more straight than spin

Yet, the Economic Survey and Budget 8212; introduced on June 12 and passed today by the Pak Parliament 8212; are good news bulletins. Pakistan8217;s days as a 8216;8216;basket-case8217;8217; 8212; Finance Minister Shaukat Aziz8217;s description of the situation when he took over in November 1999 8212; seem far away.

The Economic Survey said GDP grew 6.4 per cent in 2003-04, as against a target of 5.3 per cent. While agriculture was a relative laggard, manufacturing 13.4 per cent and services 5.2 per cent ballooned.

The 8216;8216;sharp acceleration in manufacturing growth8217;8217; came in for special mention: 8216;8216;Overall, manufacturing grew by 13.4 per cent in 2003-04 against a target of 7.8 per cent8230;Largescale manufacturing, which accounts for 68 per cent of overall manufacturing, exhibited broad-based growth of 17.1 per cent.8217;8217; Those are impressive numbers but don8217;t see them in isolation. Forex reseves were under 2 billion in 2000. Now they8217;re at 12 billlion, enough to 8216;8216;cover a year8217;s imports8217;8217; says the finance minister.

Inflation hasn8217;t crossed four per cent. Disinvestment 8212; Pakistan seems to prefer the IPO route, say officials 8212; is going along nicely, with Pakistan International Airlines8217; public issue opening in early June. The boom has ridden on the back of 8216;8216;banking reforms that began in 19978217;8217;, says says a bureaucrat. There is a change from the days when Pakistani bankers 8216;8216;lent money on personal recommendation and not credit worthiness8217;8217;.

Today consumer credit is available at five to six per cent. 8216;8216;Good companies,8217;8217; says Munawar Saeed Bhatti, Pakistan8217;s deputy high commissioner in New Delhi, 8216;8216;can borrow at three to four per cent.8217;8217;

Yet growth has not been even. A third of Pakistan8217;s 150 million still live in poverty. The Economic Survey8217;s contention that poverty has declined 4.2 per cent in a year is seen by critics as statistical jugglery. Unemployment is up from seven to nine per cent. Most new jobs are being created in services: telecom, media, restaurants. Sounds familiar, doesn8217;t it? Also defence allocation eats up Rs 194 billion of the Rs 903 billion budget. It has risen seven per cent over the previous year.

International agencies are not complaining, however. A World Bank report says, 8216;8216;Pakistan8217;s economic revival pogramme is beginning to show results.8217;8217; The Asian Development Outlook 2004, an Asian Development Bank report, says, 8216;8216;The foundation has been laid for significantly higher growth 8230; created fiscal space for the government to increase expenditures on poverty reduction and development.8217;8217;

The Pakistani government prepaid a high-cost 1.17 billion ADB loan three months ago. On June 11, it also announced it was not renewing an IMF-backed restructuring programme 8212; begun in 2000 8212; beyond 2004. In a region where the local currency8217;s value against the dollar still shapes popular sentiment, 57 Pakistani rupees now fetch a dollar, against 67 in the 9/11 period.

To Irfan Husain, a former Pakistani civil servant and now a columnist, Pakistan is reaping the benefits of America8217;s war on terror. One reason for healthy forex reserves, he says, is that 8216;8216;expats are now remitting finds through legal channels8217;8217;, rather than informal, hawala-type arrangements that are under suspicion.

Deputy High Commissioner Bhatti would agree. 8216;8216;In 2000-01, remittances from Pakistanis abroad added up to 1.3 billion. In 2002-03, they were 4.4 billion. This year they should touch 4 billion.8217;8217; Interestingly, the single-largest source of remittances in not the Gulf but the United States. In a completely haphazard polity, Pakistan owes its economic turnaround to, in essence, two men, both US-returned technocrats. Finance Minister Aziz was vice-president at Citibank in New York when Musharraf asked him to come home.