Major Economic Achievements of Musharraf GovernmentOctober 13, 2010
- I salvaged a near bankcrupt economy and transformed it to emerge as one of the four fastest growing economy in the Asian region along with China, India and Vietnam
- Pakistan’s economy grew at an average rate of 7.0 percent per annum
- The performance of large-scale manufacturing has been unparalled in the country’s history. It grew at an average rate of 11 percent per annum
- Services sector grew at an average rate of 6.0 percent per annum
- Because of our strong economic policies, Goldman Sachs a global investment bank, included Pakistan in the category of new emerging market (Next – 11) destined to play a major role in the world economic setting.
- Goldman Sachs extended their coverage from BRICs (Brazil, Russia, India and China) to eleven more emerging economic power including Pakistan, Korea, Mexico, Vietnam, Turkey etc.
- Pakistan’s per capita income doubled (from $ 526 in 1999-2000 to $1085 in 2007-08). In other words, the average income of Pakistani people more than doubled during my regime.
- The size of the economy more than doubled (from $74 billion in 1999-2000 to $170 billion in 2007-08) as well.
- I succeeded in turning around the economy with the help of Pakistan’s private sector. My government always interacted/communicated with private sector because we believed that they were the engine of growth. Constant engagement helped restore the confidence of the private sector on economic management.
- Investment as a result rose from 17.4 percent to 22.9 percent of GDP – an increase of 5.5percent of GDP in seven/eight years is unparallel in recent times in Pakistan.
- Foreign Investment surged from $0.5 billion to $8.5 billion during my government – a 17 fold increase in 8 years which reflected the growing confidence of foreign investors on Pakistan.
Unemployment & Poverty
- The government succeeded in creating 13.5 million new jobs and accordingly reduced the unemployment rate from 8.3 percent to 5.2 percent
- Strong economic growth succeeded not only in creating new jobs but reducing poverty by one – half. That is, poverty reduced to one-half during my government. The number of people living below the poverty declined from 34.5 percent in 2000-01 to 17.2 percent in 2007/08.
- Income inequality also started narrowing after 2005-06.
- Low inflation has been the hallmark of my government. Inflation averaged 5.5 percent during 2000-2007
Deficit and Debt
- Tax collection by the Federal Board of Revenue (FBR) tripled during my regime – increasing from Rs 308 billion to Rs.1025 billion
- Overall budget deficit as percentage of GDP reduced to almost one half. Budget deficit averaged over 7.0 percent of GDP during the 1980s and 1990s but was reduced to an average of 4.0 percent of GDP, thus reflecting the financial discipline of my government.
- The country’s debt burden reduced to one – half. National (Public) debt was over 100 percent of GDP by end of the 1990s but reduced to 55 percent by the end of my government
- In the words of the IMF “The large and sustained decline in the external debt to –GDP –ratio was one of Pakistan’s most remarkable macroeconomic achievements of recent years”.
- Debt servicing used to consume 64 percent total revenue in 1998-99. By maintaining financial discipline and reducing budget deficit, we succeeded in bringing it down to 25 percent only. In other words, the resources saved from debt servicing were diverted towards development program.
- Both exports and imports grew at higher double –digit-levels
- Foreign exchange reserves increased from $500 million to over $16 billion – a sixteen fold increase in reserves during my government.
- Exchange rate remained stable as a result of the build up in foreign exchange reserves
- Remittances continued to grow from less than $1.0 billion to over $16.0 billion
- Pakistan’s international credit rating continued to improve from selective default to B+
- I had the honour of taking Pakistan out of the IMF program in December 2004.
- We re-entered the international bond and equity markets by floating Eurobonds and Global Depository Receipts (GDR). We also succeeded in floating a 30 year Eurobond which showed the confidence of the global investors in Pakistan.
- We pursued a successful privatization program for the state-owned enterprises (SOEs).
- Karachi Stock Exchange emerged as one of the best stock exchange, in emerging economies. The Karachi Stock Exchange Index surged more than 11 times – rising from 1189 in October to 13998 in November 2007. This represented the growing confidence of the private sector (both domestic and foreign) on economic management.
- Overall Literacy Rate increased from 45% to 55% during 2000-01 to 2006-07.
- Male literacy rate increased from 58% to 67%.
- Female literacy rate increased from 32% to 42% during my government.
- Gross enrolment at primary level (5.9 years) increased from 72% to 91% – an increase of 19 percentage points.
- The state of higher education in Pakistan was in a pathetic condition prior to my government. We had 48 universities; the number of Ph.Ds and engineers per million population was only 112 –about one – third of the minimum standards prescribed by the UNESCO. We had the stock of only 2600 science Ph.D and the country was producing barely 50-60 per annum.
- My government launched a multi – pronged strategy, including the establishment of Higher Education Commission (HEC).
- We provided substantial resources to higher education. The development budget for higher education increased from Rs. 500 million to Rs. 14 billion in 2006-07 .
- Number of universities increased to 130 in 2006-07 from 48 in 1998-99.
- Number of students enrolled in universities increased from 276 thousands to 948 thousands – more than three fold increase in enrolment in universities.
- Number of Ph.Ds produced by Pakistani universities increased sharply to 624 from as low as 50 – 60.
- There were 3800 students sent abroad for higher education (Ph.D) in foreign universities, of which, 303 have completed their degrees.
- There 3508 students enrolled in Ph.D Programs in Pakistani universities, of which 336 have completed their programs.
- Various Health indicators also improved during my government. for example, children aged 12-23 months immunized increased from 53% in 2000-01to 76% in 2006-07.
- Life expectancy increased from 63 years in 2000 to 66.5 years by 2008
- Infant mortality rate declined from 83.3 per 1000 infants in 2000 to 65 by 2008.
- Social Sector and Poverty – Related Expenditures Increased from Rs. 167 billion (3.8% of GDP) to Rs. 500 billion (5.7 % of GDP)
Question: Not a single MW of power was added to the national grid in your time. Is this perception correct?
Answer: This perception is factually incorrect. The total installed generation capacity in 2000-01 was 17,772 MW which increased to 19,566 MW by 2007-08 – an increase of 1794 MW during my tenure. These facts are well documented in Pakistan Economic Survey 2001-02 (PP. 202, Table 15.13) and Pakistan Economic Survey 2007-08 (PP.259, Table 15.16)
Out of 1794 MW increase in installed generation capacity, 1770MW (99%) increase is attributed to WAPDA. The major addition came from Ghazibrotha power project.
But I would like to explain a little bit more on this issue. In 2000-01, Pakistan was having a surplus of 3000 MW because of the induction of electricity through the Independent Power Producers (IPPs). According to the 1994 Power Policy, even if we did not consume electricity, the government was required to pay 60% of the capacity to respective IPPs. Thus, we were having surplus power 3000 MW with all its financial implications.
We entered into negotiation with India to export electricity but it did not work out for a variety of reasons, including the military standoff in December 2001 till August – September 2002.
By January 2003, we were still having surplus of 2000 MW with all its financial implications. Do you think that my government would have set up another power plant when we were already having surplus electricity. According to our estimates, the surplus power was to be a eliminated by 2007 provided our consumption of electricity would have grown at the rate of 6 percent per annum.
Pakistan’s economy grew at an average rate of 7.5 percent per annum during 2003-07 and accordingly the electricity consumption grew at an average rate of 10-11 percent – much higher than our assumption of 6 percent. Consequently, the surplus power was eliminated by mid- 2004 instead of 2007.
Your question would then be: what did your government do in mid – 2004? My answer is plain. We launched 50 new power projects totaling 12, 141 MW during February 2004 and until June 2007.
These facts can be checked with Private Power Infrastructure Board (PPIB). These projects were to come in operation during October 2008 to December 2015. You should keep in mind that it takes minimum four years for a power plant to come under operation. Three of the said projects have come into operation and inaugurated by the current Prime Minister.
Thus, the perception is absolutely wrong. It was created deliberately by the present regime to hide their inefficiencies and misguide the people of Pakistan.
Question: People have raised question about the utilization of US assistance under was against terror which was provided to your government.
Answer: People have raised question about US assistance on war against terror because they were not provided facts. Let me give you the facts.
The total US assistance since 2001-02 and until November 2008 (the last number I have) amounted to $10,768 million. These assistance include economic, military and war against terror. Of the total assistance of $10,768 million, $6,062 million (56.3%) was the reimbursement of expenditure that Pakistan incurred against the war on terror. Since war on terror is being fought on daily basis, the expenditures are also incurred on daily basis.
My question to you: should we treat reimbursement as economic assistance? The answer is certainly no. Thus, over 56 percent of US money was not economic assistance. This was our money which was reimbursed by the US.
The remaining $4,706 million included debt write off ($1495 million), $ 3 billion US assistance package under the Camp David agreement; and remaining amount included grants for the purchase of Wheat and Soyabean oil.The bottom line is that Pakistan received $1,514 million in cash over seven – and – a half years.