Pakistan Facing Another Lost Decade Like 1990s?
|Pakistan GDP Growth Rates Since 1993. Source: World Bank|
Economy in 1990s:
Before the current Prime Minister Nawaz Sharif was ousted by General Pervez Musharraf in 1999, Pakistan's two main political parties had presided over a decade of corruption and mismanagement. In 1999 Pakistan’s economy was the slowest in South Asia while its total public debt as percentage of GDP was the highest in the region– 99.3 percent of its GDP and 629 percent of its revenue receipts, compared to Sri Lanka (91.1% and 528.3% respectively in 1998) and India (47.2% and 384.9% respectively in 1998). Internal Debt of Pakistan in 1999 was 45.6 per cent of GDP and 289.1 per cent of its revenue receipts, as compared to Sri Lanka (45.7% and 264.8% respectively in 1998) and India (44.0% and 358.4% respectively in 1998).
Under President Musharraf's leadership, Pakistan became one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging over 6 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.
The above facts were acknowledged by the PPP government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008. The document clearly (but grudgingly) acknowledged that "Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07" elevating Pakistan from low-income to middle-income country.
IMF MOU of 2008 further acknowledged that Pakistan's "volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)
Pakistan experienced rapid economic and human capital growth in years 2000 to 2008 on President Pervez Musharraf's watch. Savings, investments and exports hit new records and the rate of increase in human development reached new highs not seen before or since this period.
|Pakistan Per Capita Income 1960-2012. Source: World Bank|