Economic Pakistan

Given is a quick list of pakistan’s Economic progress under supervision of President Musharraf. Shame to those democrates who dragged Pakistan for begging again to IMF.



(Compiled by: Mirza Rohail Baig)

Pak Economy in 1999 was: $ 75 billion (Source)
Pak Economy in 2007 is: $ 160 billion (Source) and (Source)
Pak Economy in 2008 is: $ 170 billion (Source)

GDP Purchasing Power Parity (PPP) in 1999: $ 270 billion (Source)
GDP Purchasing Power Parity (PPP) in 2007: $ 475.5 billion (Source)
GDP Purchasing Power Parity (PPP) in 2008: $ 504.3 billion (Source)

GDP per Capita Income in 2008: $1085 (Source)

Pak revenue collection 1999: Rs. 305 billion (Source)
Pak revenue collection 2007: Rs. 708 billion (Source) and (Source)

Pak revenue collection 2008: Rs. 990 billion (Source)

Pak Foreign reserves in 1999: $ 1.96 billion (Source)
Pak Foreign reserves in 2007: $ 16.4 billion (Source) and (Source)

Pak Foreign reserves in 2008: $ 8.89 billion (Source)

Pak Exports in 1999: $ 8 billion (Source)
Pak Exports in 2007: $ 18.5 billion (Source)

Textile Exports in 1999: $ 5.5 billion
Textile Exports in 2007: $ 11.2 billion (Source)

KHI stock exchange 1999: $ 5 billion at 700 points
KHI stock exchange 2007: $ 75 billion at 14,000 points (Source)
KHI stock exchange 2008: $ 46 billion at 9,300 points (Source)

KHI stock exchange 2009: $ 20 billion at 4,972 points (Source) 

Foreign Investment in 1999: $ 301 million (Source)
Foreign Investment in 2007: $ 8.4 billion (Source)

Debt servicing 1999: 65% of GDP (Source) and (Source)
Debt servicing 2007: 28% of GDP (Source) and (Source)

Debt servicing 2008: 27% of GDP (Source)

Poverty level in 1999: 34% (Source) and (Source)
Poverty level in 2007: 24% (Source) and (Source)

Literacy rate in 1999: 45% (Source)
Literacy rate in 2007: 53% (Source)

Pak Development programs 1999: Rs. 80 billion (Source)
Pak Development programs 2007: Rs. 520 billion (Source)
Pak Development programs 2008: Rs. 549.7 billion (Source)

(Source: http://presidentmusharraf.wordpress.com)

Foreign Reserves Phenomenon: Shaukat Aziz versus PPP


(By Afreen Baig)

Foreign Reserves – a significant economic indicator and of vital importance to every expanding economy. Foreign Reserves is the first and basic economic indicator that transmits an air of confidence and trust, amongst the potential foreign & local investors and the nation. Foreign Reserves are held in abundance and accumulated – in order to sustain the confidence of a country’s capacity to carry out external trade confidently, to balance the momentum between demand & supply of foreign currencies, and also used as an intervention tool by the State Bank. Reserves also bail out the economy in times of financial crisis.

By October 2007, at the end of Prime Minister Shaukat Aziz’s tenure, Pakistan raised back its Foreign Reserves to a handsome $16.4 billion. His exceptional policies kept our 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.

Pakistan recently has seen a drastic drop in its Reserves by 50% and its currency devalued by 40%, which has left ordinary people confused and the usual cynics have started heaping the blame onto the policies of Mr. Shaukat Aziz, without even knowing the basic macro-economic indicators nor understanding the relationship b/w Foreign reserves, Trade deficit and Currency devaluation.

The Trade deficit (Exports minus Imports) is always managed in ratio to Revenue generation, Capital inflows and Reserves. Almost all developing economies face the dread of trade deficit but their abundant foreign reserves gives them the fiscal space to overcome those grievances.

Illustrating in mathematics for ordinary readers, on October 2007, when PM Shaukat Aziz left us:

Exports – $18 billion

Imports – $30.53 billion

Trade deficit – $12.53 billion

Foreign Reserves – $16.4 billion

What is to be seen above is that, Pakistan’s Foreign Reserves $16.4 bn exceeded the trade deficit $12.53 bn by a comfortable $3.87 billion and with an additional foreign investment of $8.4 billion – Pakistan’s currency stayed stable at Rs.61 per dollar.

Currency starts to devalue ONLY when the Trade deficit surpasses the Foreign Reserves.  This rare phenomenon occurred in PPP’s incompetent & dense minded government, which has led to devaluation of the currency by 40%. They failed to protect our Sovereignty – our Foreign Reserves!

In PPP’s inept government of eight months,

Trade deficit – $20.74 billion

Foreign reserves – $8 billion

Under PPP, the Reserves fell from $14 billion to $8 billion and the trade deficit increased from $12.53 billion to $20.74 billion.

The moment the foreign reserves ($8 bn) fell below the trade deficit ($20.74 bn), the currency starts to devalue. Under Mr. Shaukat Aziz, Rupee stayed stable till October 2007, because our Reserves $16.4 billion EXCEEDED our Trade deficit of $12.53 billion.

In 2007, when international oil prices reached an alarming level of  around $90 per barrel, predicting to exceed $140 per barrel, it hurt the Imports bill of many developing countries, by increasing the trade deficit. The experienced Mr. Shaukat Aziz gauged this situation and immediately started monitoring & controlling individual sectors that were importing. He allowed imports only in sectors that were export specific. His efforts resulted in decreasing our Import bill by 6.53% by September 2007 (one month before he left).

Rupee stayed stable throughout Mr. Musharraf’s supported governments. Trade deficit never exceeded the foreign reserves in the last eight years. The results were as follows – a stable rupee:

2001-02: Rs. 61
2002-03: Rs. 57.7
2003-04: Rs. 57.92
2004-05: Rs. 59.66
2005-06: Rs. 60.16
2006-07: Rs. 60.5
2007 (Dec): Rs. 61

What did the inefficient PPP do in these last eight months? They failed to monitor each sector of imports to control them individually. Pakistan’s economy started destabilizing because PPP could not guard our $14 billion reserves. Nor did they utilize any effort to increase the reserves from where Mr. Shaukat Aziz left it at $16.4 billion! The easier way out for them is to beg around the world barefaced or go back to IMF disgracefully.

What did the PPP further do? They increased the import bill by 55% in the months April to June 2008 and again increased it by 52.65% in the months July to September 2008 – though world oil prices fell from $140 per barrel to $70 per barrel.

Flight of capital takes place ONLY in economies where there is lack of trust and faith! Investors and endowing Public do not trust the government of PPP and are wary of PPP’s earlier corrupt reputation.

In the first four months of PPP, around $22 billion were withdrawn from the economy and KSE’s market capitalization fell by $29 billion. The State Bank was forced to place ban on transfer of dollar outside Pakistan.

Foreign reserves get hurt twice in this depletion process. First, when the investors and public pull back their money. Second, when macro-economic indicators witness imbalance and the government is forced to pay their external liabilities through these Reserves. This second stage occurs only when the government loses other means of regular income and is unable to control their imports.

Every country in the world is forced to make Imports. Imports help boost Exports. Even the world exporter China makes an import worth around $954 billion, to further promote their exports. But, Imports should be Export specific – scrutinized and restrained monthly – which was being done under the policies implemented by Mr. Shaukat Aziz.

Let’s analyze the steady India, as an example, with GDP growth of 9%.

Indian Imports – $188 billion (compared to Pakistan’s imports of $40 billion)

Indian Trade deficit – $63 billion (compared to Pakistan’s deficit of $20 billion)

The Indian currency is not devaluing because their Foreign Reserves $308 billion exceed their trade deficit of $63 billion.

Had Mr. Shaukat Aziz continued, the Trade deficit would have been kept controlled in accordance with Pakistan’s Revenue generation, Capital inflows and Foreign Reserves – which would have kept our rupee stable and economy booming at 7% GDP growth.

This latest IMF tranche of $7.6 billion, pre-arranged for a period of two years, will not help boost an economy whose foreign investment is declining, and where the trade deficit exceeds the total foreign reserves. This economic deception is yet another soothing drug given to us, by our unpopular democratic government of PPP.

If Pakistan wishes to remain free from influence of IMF, there is no better option than to assert our economic sovereignty and accumulate Foreign Reserves, from help of over-seas Pakistani. Additionally, attract foreign direct investment (FDI) and public & private portfolio investment.  Regrettably, PPP lacks the credibility and the reliability to attract back that trust and confidence!

 Afreen Baig is an independent analyst majoring in International Relations and Economics. She can be reached at afreenbaig@gmail.com

(Source: http://presidentmusharraf.wordpress.com

GDP per Capita Income in 1999: $ 450 (Source)
GDP per Capita Income in 2007: $ 926 (Source)


  1. i think u have provided a lot of empirical data in support of ur arguement. further i principally agree with ur point of view that govt fiscal policy and monetary policy(through SBP ) was effective to the great extent.

    however, i want to point out certain other aspect.
    e.g. it is an open secret that in last 10 years the capital flow of the world was towards 3rd world countries (asia, latin amrica and to some extent africa). we need to comparatively analyse or development and eceonomic growth.
    e.g. veitnam india , bangladesh , brazil and when we compare it we still find that we are far behind them.

    further, the reserve increase was mainly due to the strict check on “hundi and Hawala” system and that has done under the auspicies of IMF and FATF. further in mushurruf regime govt sold i think more 100 units to the foreign investor which resulted in huge inflow of forex to the country. now we have left with very few assest than can be sold to the foreign investor…. so funds inflow to the country through privitisation is not possible as it was in Mushurruf regime….

    in his regime we have witnessed that bubble was created…… as there was activity in large scale manufacturing less than desired…. our GDP invrease was mainly due to the growth in financial and services sector…. we dont see a noticeable sustainable grwoth in the manufacturing ector like textile, chemical and other major industries….

    even the last govt failed to boost/improved the textile industry to make it competitive in the world market.

    due to easy credit an artifical demand of the consumer goods increased without the sustainable growth in econmy to support it.

    further the govt could not handle power shortage, food item … etc

  2. Thankyou Wasim, for your detailed comments. We appreciate it. We always encourage positive, balanced and healthy discussion. The house is open for every one.
    For Pakistan, we all are ONE.

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