According to the Economic Survey of Pakistan (2001-02), the country was denied the much awaited economic ‘turnaround’ during the outgoing year because of the events of September 11 and December 13 (2001) as well as the continuation of what the Survey calls the ‘catastrophic’ drought conditions which has continued over the last three years.

While not disputing the seriousness of the impact of the above two events and the drought on the overall economy, one finds it impossible to agree with the authors of the government document that there was even a remote of chance of a ‘turnaround’ even if the economy had a smooth run during the last 12 months. In the words of the Survey itself,” Although the economic growth has remained hostage to unprecedented drought for over two years, low levels of investment have nevertheless been responsible for keeping economic growth at a lower level.”

And the authors of the Survey then give evidence of their own intellectual bankruptcy when they stop short of shouting “Eureka’ but admit:” There is now considerable evidence that investment is one of the most important determinants of long-term economic growth.” Either they have forgotten all that they had learnt in their economic primers about the co-relation between investment and growth or they think their audience are utter illiterate and or perhaps all what they had learnt in their economic classes they been made to unlearn by the IMF.

The admission that investment declined from 19 per cent of GDP in early 1990s to 16 per cent on average, over the last two years, a loss of a massive 3 per centage points, is in fact, an indirect admission that all those IMF programmes which this government has been implementing with religious fervour have totally failed to revive the economy. The most hilarious sentence in the Survey reads:” How to raise investment level is a major challenge for the government over the medium term.” And more hilarious is the harebrained formula they have designed for boosting investment. It is based on macroeconomic situation, governance and infrastructure.

According to this formula, “a stable macroeconomic environment characterized by low inflation, low budget and current account deficits, and comfortable foreign exchange reserves, accompanied by wide ranging structural reform programme, make up one crucial set of ingredient for spurring investment and productivity growth( but) bureaucratic hurdles, cumbersome labour laws, interaction with tax authorities, and other irritants have been the major ( governance) problems in doing business in Pakistan...( and thirdly) uninterrupted power supply at competitive rates, good condition roads, rail and telecommunications network, efficient port operations, and quick custom clearance from the port are important ingredients of any country’s infrastructure.”

This government has been working very closely with the World Bank, the Asian Development Bank and the IMF over the last two and a half years to improve what these three multilateral aid agencies say the ‘governance’ in this country. But, so far, nothing has moved or improved. Take for instance the case of the Central Board of Revenue (CBR). Over the last three year this organization has been under the scalpel of more reformers than it has officers but with the passing of each day it has become ever more corrupt and ever more inefficient.

There is no force within the government or outside which could dare veto the military rulers if they really wanted to reform the bureaucracy and eliminate all the bureaucratic hurdles in the way of smooth investment activity. Tall claims were made and NAB was let loose on the officialdom but to no avail.

The main hurdle in the way seems to be the military government itself as it has been seen to be treating the law of the land with total impunity when it comes to strengthening its political hold or repressing its political opponents. You cannot implement the rule of law in the economic sector and violate it in the political sector. This robs the government of its moral authority to introduce rules of fair game within the bureaucracy.

And one is not sure if the bureaucracy would let their helping hand that they extended to the President during the course of his referendum campaign go unrewarded. And sure enough, some of the favourites of the government have gone and allegedly awarded huge contracts to their friends by indulging in selective tendering. There has been no movement so far on the so-called judicial reforms for which the Asian Development Bank has already approved as much as $350 million.

Pakistan lacks both the physical as well as social infrastructure in the quantities needed for a country to launch its economic revival efforts. In the last two and half years at least, the main hurdle in the way of expansion of the infrastructural facilities has been the multilateral donors themselves.

These donors who have been providing the government with liberal ‘dole’ have, however, made this generous assistance conditional on the government reducing the budgetary allocations for developing infrastructure on the one hand and on the other enhancing their rates and tariffs manifolds pushing even the inadequately available infrastructure out of the reach of even the middle classes.

And with such a situation prevailing, it is indeed amazing how the government has succeeded in recording significant improvement in Pakistan’s external account. According to the Survey improvement in trade balance, sharp increase in the inflow of workers’ remittances and substantial increase in official transfers are mainly responsible for strengthening of external account.

However, the improvement in trade balance has been the result of relatively sharper decline in imports than increases in exports. Exports in value terms registered a decline of 1.8 per cent in the first ten months.

On the other hand, according to the Survey,Pakistan’s imports also suffered because of the disruption in shipping and cargo service, and substantial increases in freight charges. These factors ‘along with the decline in prices in POL products in international markets and lesser import requirements of sugar and soyabean oil have led to a decline in imports by seven per cent in the same period.’ As a result of decline in exports and imports, the trade balance improved by 34 per cent until May 31, 2002. Another key element in improving current account balance has been the sharp increase in the inflow of workers’ remittances . If the current trend continues, workers’ remittances may cross $2.2 billion by June 30, 2002. Yet another most important achievement of the year has been the sharp build up in foreign exchange reserves. It is now in the range of almost $6 billion.

If Pakistan continued to fight unnecessary wars in the coming year, it is most unlikely that the country would be able to sustain its gains on the external front which in any case are not the result of the real economic development.

All this has come about because of some highly unexpected and almost one-time developments like debt rescheduling and the 9.11 related generous grants as well as the panic remittances from overseas Pakistanis who fearing confiscation of their life’s savings on suspicion of being connected with terrorist organizations had decided to send their money to Pakistan.

So, if one went by what the Survey has presented, the picture does not look all that reassuring. No where is there any indication in the report that the official managers understand the gravity of the situation and have attempted or even desire to attempt to tackle the fundamental problems that are undermining the country’s economy. The most fundamental of them all is the need to revive investment and urgently.

The year that went by did not show any sign of such investment activity and the way this issue has been attempted to be papered over in the report gives one the impression that even in the coming months and years, the present official economic managers, if they continue to be at the helm of economic affairs would not stray out of the path they have been put on by the IMF. And at the end of this path, there is only economic chaos and deepening and widening poverty.