Talking to Dawn, he agreed that the economic indicators were not looking good, but assured that the government had prepared a nine-point programme to not only stabilize the economy, but also to extend assistance to the poorest of the poor in society.
His belief that good days lie ahead largely rests on “the dynamic, diligent and hardworking people of Pakistan” who, he thinks, will help steer the rocking boat of the country safely through the choppy waters stirred by the global financial crisis.
The following are excerpts from the interview:
Q: Economic data is depressing and people are under stress, but they do not appear inclined to go for a public movement. What do you say?
A: I agree that the economic data are not encouraging. Inflation at 25 per cent is on a 30-year high, the budget deficit and the current account deficit at 7.4 per cent and 8.4, per cent of GDP respectively are also very high, and the currency and capital markets around the world are depressed because of the global financial turmoil, Pakistan being no exception. We have been hit hard by external shocks, particularly on account of the unprecedented rise in food and fuel prices. Pakistan is not an island economy; rather it is well integrated with the outside world and, therefore, cannot remain immune to global developments.
The government is fully aware of the difficulties being faced by the people in general, and the poor and the fixed-income group, in particular. The government has already launched the Benazir Income Support Programme which will provide assistance to 3.5 million households and will gradually cover twice as many. Though people are under stress, they have faith in the government and the political leadership which is actively working to mitigate their sufferings.
Q: What are the sources of resilience in the economy? Even when the government is bankrupt, the household economy somehow manages to stay afloat. Is the link between the national and household economy too weak? A: Pakistan’s economy is resilient as it has demonstrated its strength to withstand shocks of extraordinary proportions like the devastating earthquake of October 2005; political instability; an unsatisfactory security environment; and food and fuel price hikes in 2007-08. The source of this resilience includes the common man who is dynamic, diligent and hardworking.
I do not agree with the notion that Pakistan government is bankrupt. We are facing challenges, but the government is certainly fulfilling all its payment obligations, whether domestic or external. The overall economy is the aggregation of household economy. So if individual households are managing to stay afloat, so does the overall economy. The question of separating national and household economy is, therefore, inappropriate. Whatever happens at the household level will be reflected on the larger scale.
Q: There seems to be a huge gap between the projections on paper and the reality. Is it because the data is inaccurate or has it been engineered for political expediency?
A: Projection is not an exact science. Projections about the future are based on certain assumptions. If the assumptions change, then certainly the projections will be different. This is not rocket science and every student of economics knows this. The quality of economic data in any country would depend on the level of investment made in their statistical organization. Developed countries spend more on this count compared to developing countries. In Pakistan, it has never been a priority area. We do not pay the professionals well and, in turn, they do not take pride in their job. The data, therefore, is bound to be of a lesser quality. The government would certainly like to strengthen the country’s statistical institutions by making them autonomous and injecting qualified and trained manpower.
Q: Do you agree with the perception that governments in Pakistan tend to exaggerate problems to get easy money from donors which is then largely mis-spent. Dollars that poured in during the last government only prove the point.
A: I just do not share this perception because it pre-supposes that the staff/experts of the donor agencies are incompetent which is certainly not the case. They do not provide money to any country on the basis of exaggerated problems. They have their processes of approving loans, which are transparent and pass through several layers of scrutiny.
Q: Do you think enough has been done to build on the strength of both human and physical resources of the country?
A: There can never be enough done in this regard. There will always be room for improvement. The government is following a nine-point agenda of which human resource development (health and education), integrated energy development plan (physical resources) and consolidation and up-gradation of the government’s administrative machinery are three key pillars. This is part of the government’s basic reform agenda.