THE International Monetary Fund (IMF) mission that visited Pakistan this month concluded the economic evaluation on a positive note.

Paul Chabrier, Advisor to the IMF’s managing director, gave a clean chit to the government regarding the economic performance during the first year of the three years’ economic reform package for $1.33 billion PRGF.

He termed it unambiguously “on track” but at the same time cautioned that continuation of these reforms was a “must” after the October elections, to achieve the goal of financial stability and sustainable development.

He asserted “the way the present government has implemented the reform agenda and guided its energies to pursue with the IMF prescription with vigour and sincerity has earned the country credibility in the international financial institutions. “Some of the achievements like a low rate of inflation, increase in reserves, and perceptible fall in debt to GDP ratio, were particularly commendable, especially if seen in the context of shocks in the aftermath of the September 11 events.

Developments during the first month of the current fiscal year were also stated to be highly encouraging. The steep increase in country’s merchandise trade, tax collections, home remittances and hope that the foreign exchange reserves would go up to $8 billion in the coming months.

Based on one month’s performance, Paul Chabrier said all projections set in the budget 2002-03 were manageable and downward revision of any target never became the part of discussions between the IMF review mission and the government.

If the dangerous geo-political situation is improved, the growth can get better. The mood is upbeat and the approval of the fourth tranche of PRGF by the executive board of the fund in October appears to be a foregone conclusion.

However, optimism also conceals the uneasiness regarding the continuity of reforms beyond October, the need of which has emphasised again and again. Much had been achieved on the economic front but still a number of challenges remained to be taken care of.

The Fund Advisor also emphasized continuation of reform package, saying that during his visit he had met a number of highly responsible people who agreed with the ongoing reforms with minor differences and urged that “economic reforms should not be allowed to become hostage to democracy.” The need of reforms is in long-term interest of the country.

The President Perveiz Mushrraf has never minced words in declaring that he would hand over the power to the elected prime minister who would be free to make all the major decisions.

Fortunately, in the aftermath of September 11, Pakistani economy did not collapse. However, one cannot ignore that last year’s growth rate almost stagnated, tax collections were much lower than the target due to exogenous factors and there are clear indications that both poverty level and unemployment increased considerably.

Even though one year is too short a period for a breakthrough, but seen dispassionately the country is yet to make any visible progress on poverty reduction and revival of growth, which were the real aims of PRGF. Since March 2002, industrial output, exports and revenue collection are showing an upward trend.

The government hopes that the check and balance system through the amendments in the constitution would see a better working relation between president and prime minister, thus saving the economy from uncertainty that it has faced in the last 15 years. The change of the government also brought immediate change in policies, which made Pakistan an unreliable country.

The challenge for any government—in the last 20 years—and of course, for coming rulers is poverty. Fight against poverty needs sustained effort. It does not have any overnight solutions. The government would have to enhance social spending through the public sector development budget to fight the rising trend of poverty.

The Asian Development Bank, which has promised to step up its financial support to enable Pakistan to fight rising poverty, says poverty is the biggest challenge. In a report released this month, the ADB said the poverty level in Pakistan in 1999 was estimated at an average 32.2 per cent, with a significantly high incidence of 36.3 percent in rural areas, and 22.6 per cent in urban areas. ADB based its estimate on data released in 1999 by the official Federal Bureau of Statistics.

The bank will provide $1.1 billion financing to the country in the current calendar year. The support is to achieve [economic] growth and poverty reduction. The ADB has long supported the Pakistani government in a variety of areas and will continue to help in agro-based industry, small and medium businesses, and services sector, including health and education. There is a need to convert all this support for the good of the masses. Otherwise all the economic success would remain futile.

The scenario is important for the coming government after the October polls. It will be facing a whole new ball-game. It would have a good base to start with, but economic challenges would be equally tough.