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Pakistan Cut Public Debt in Half On Musharraf's Watch in 1999-2008

RiazHaq

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In 1999, President Pervez Musharraf inherited a massive debt of over 100% of GDP run up by the Pakistan Peoples Party and the Pakistan Muslim League (Nawaz) governments in 1990s. Musharraf's policies not only revived the bankrupt economy but also brought down debt to 52% of GDP by 2007.

Pakistan Debt to GDP 1995-2021. Source: IMF




PPP Government's 2008 Letter to IMF:

In a letter to the International Monetary Fund in 2008, the PPP government hailed Musharraf's economic record without mentioning his name in the following words:

"Pakistan's economy witnessed a major economic transformation in the last decade (2000-2008). 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.....the 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).

Savings and Investments:

Domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007, according to IMF. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs. Pakistan was lifted from a poor, low-income country with per capita income of just $500 in 1999 to a middle-income country with per capita income exceeding $1000 in 2007.




Human Capital Development:

In addition to the economic revival, Musharraf focused on the social sector as well. Pakistan's Human Development Index (HDI) score grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.



Overall, Pakistan's human development score rose by 18.9% during the Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent. Going further back to the decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP, the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

Acceleration of HDI growth during Musharraf years was not an accident. Not only did Musharraf's policies accelerate economic growth, helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. Government R&D spending jumped from 0.1% of GDP in 1999 to 0.7% of GDP in 2007. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which continue to sustain huge losses due to patronage-based hiring.

Pakistan textile exports more than doubled from $5.2 billion to more than $11 billion during the Musharraf years. Exports soared 19.43% in 2001, 20% in 2004, 24.5% in 2005 and 11.23% in 2006, all on President Musharraf's watch, according to "The Rise and Fall of Pakistan's Textile Industry: An Analytical View" published by Javed Memon, Abdul Aziz and Muhammad Qayyum.
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.
Comparing Per Capita GDP Trajectory in South Asia. Source: The Economist
Until 2010, Bangladesh was a laggard in South Asia region. Its per capita income was about half of Pakistan's. Now Bangladesh's per capita GDP is higher than both India's and Pakistan's. What changed? The biggest change is Bangladeshi leader Shaikh Hasina's decision to stifle the unruly Opposition and the media to bring political and economic stability to the South Asian nation of 160 million people. It has eliminated a constant sense of crisis and assured investors and businesses of continuity of government policies. With development taking precedence over democracy, Shaikh Hasina followed the example of Asian Tigers by focusing on export-led economic growth of her country. She incentivized the export-oriented garment industry and invested in human development. Bangladesh now outperforms India and Pakistan in a whole range of socioeconomic indicators: exports, economic growth, infant mortality rate, primary school enrollment, fertility rate and life expectancy.
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Sainthood 101

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resident Pervez Musharraf inherited a massive debt of over 100% of GDP run up by the Pakistan Peoples Party and the Pakistan Muslim League (Nawaz) governments in 1990s

same thing happened in 2018 man, this is absolutely ridiculous man
A national security risks from the very beginning
 

FuturePAF

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resident Pervez Musharraf inherited a massive debt of over 100% of GDP run up by the Pakistan Peoples Party and the Pakistan Muslim League (Nawaz) governments in 1990s

same thing happened in 2018 man, this is absolutely ridiculous man
A national security risks from the very beginning
Perhaps with at least a second term for PTI, Pakistan too can get back to similar metrics (such as Debt to GDP) by 2028.
 

hydrabadi_arab

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Musharraf got bag full of $$ aid after 9/11. Fixed dollar at rs60 artificially. By end of his rule Pakistan again had to beg to IMF.

Thats what Pakistan do best. Cannot live with their own means because we are used to handouts.
 

SaadH

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Bush's toady Mushy got a lot of external debt written off as well for waging a war against his own countrymen and co-religionists, and destroying the country in the whole process...

And before anyone forget this imbecile also passed NRO and handed the country off to of all people Zardari...

Mushy's the sole reason Pakistan is in this $h!t state.

In the history of Pakistan there have been two people who've done the most by far to destroy the country at all levels, one is Bhutto and the other is Mushy...
 

TNT

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No one mentions the fact that it was tens of billions of aid that improved the economy and not that Musharraf was a good leader or administrator. Infact with huge open and hidden aid, he could have made the country stand on its feet but it was all superficial and the country was begging IMF as soon as he left. He enriched the same elite class and made the same political scum his allies. His leftovers are still serving in PTI and we can see their pathetic performance.
 

ziaulislam

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resident Pervez Musharraf inherited a massive debt of over 100% of GDP run up by the Pakistan Peoples Party and the Pakistan Muslim League (Nawaz) governments in 1990s

same thing happened in 2018 man, this is absolutely ridiculous man
A national security risks from the very beginning
He got a bankrupted pakistan
It was miracle turn around mostly because of 9/11 almost all debt was refinanaced

One can however argue that he could have gotten a better deal
For xample the zardaris and nawqz milked uncle sam far more then he did(zardari era and nawaz era foreign aid was twice as compared to him)

No one mentions the fact that it was tens of billions of aid that improved the economy and not that Musharraf was a good leader or administrator. Infact with huge open and hidden aid, he could have made the country stand on its feet but it was all superficial and the country was begging IMF as soon as he left. He enriched the same elite class and made the same political scum his allies. His leftovers are still serving in PTI and we can see their pathetic performance.
Nope
Transfers are open book
Most of aid came after 2008 in form of kerri loger bill and CSF of around 2b/month

Its pitty that he subsidzed stuff during fanancial crisis of 2008 that led to a breif crash but overall it wasnt a big crash
 

Mav3rick

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Perhaps with at least a second term for PTI, Pakistan too can get back to similar metrics (such as Debt to GDP) by 2028.

Because of how superbly PTI Government has performed in its 3+ years so far? Fortunately, the graph by IMF is right at the very top of the first page of this thread which is visible to all who are not blind. in 2018 the debt to GDP was around 70% and after 3 years of PTI Governance, it is touching almost 90%!!!!
 

Mav3rick

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Until 2010, Bangladesh was a laggard in South Asia region. Its per capita income was about half of Pakistan's. Now Bangladesh's per capita GDP is higher than both India's and Pakistan's. What changed? The biggest change is Bangladeshi leader Shaikh Hasina's decision to stifle the unruly Opposition and the media to bring political and economic stability to the South Asian nation of 160 million people. It has eliminated a constant sense of crisis and assured investors and businesses of continuity of government policies. With development taking precedence over democracy, Shaikh Hasina followed the example of Asian Tigers by focusing on export-led economic growth of her country. She incentivized the export-oriented garment industry and invested in human development. Bangladesh now outperforms India and Pakistan in a whole range of socioeconomic indicators: exports, economic growth, infant mortality rate, primary school enrollment, fertility rate and life expectancy.
Musharraf did some wonderful things for Pakistan; however, he failed to respond to growing power requirements and his 8 years laid the foundation of energy crisis in the country which led to the flight of most of the export oriented industry (especially textile).
 

SoulSpokesman

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@Mav3rick

Maverick sb,

however, he failed to respond to growing power requirements and his 8 years laid the foundation of energy crisis in the country which led to the flight of most of the export oriented industry (especially textile).

That is a very pertinent point you make, sir. The bigger picture was that the liquidity Pak enjoyed during Mushy's tenure was largely spent in financing a consumer boom than in long-term investments in the energy sector.

Regards
 

Mav3rick

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@Mav3rick

Maverick sb,

however, he failed to respond to growing power requirements and his 8 years laid the foundation of energy crisis in the country which led to the flight of most of the export oriented industry (especially textile).

That is a very pertinent point you make, sir. The bigger picture was that the liquidity Pak enjoyed during Mushy's tenure was largely spent in financing a consumer boom than in long-term investments in the energy sector.

Regards

Yeah, thanks. Although I cannot figure out why Musharraf couldn't identify the glaring shortfall. What could have blindsided him to such an extent; and what were all the advisers doing, especially those working in the power sector.
 

SoulSpokesman

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@Mav3rick

If you recall in the late 1990s and early 2000s Pak had set up lots of oil fired boilers under rental companies. There was much to be said for that strategy, such plants have low capital costs, very short gestation period and quite flexible in their operations. Until mid 2000s or so oil prices were low, so costs were also quite competitive.

Things of course turned turtle after 2005 or so. With oil prices going up dramatically, all these oil prices went through the roof. Oil based generation became infeasible and Pak was saddled with large capacity charges. And given that new coal fired plants of large scale require 4-5 years to set up, Pak was clearly caught on the wrong foot.

One can argue that his advisers should have known better and pushed for coal and hydro but it is easy to be wise in hindsight. Had Pak been as well blessed with coal as India is, perhaps the advisers would have followed a different line.

Regards
 

RiazHaq

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Musharraf got bag full of $$ aid after 9/11. Fixed dollar at rs60 artificially. By end of his rule Pakistan again had to beg to IMF.

Thats what Pakistan do best. Cannot live with their own means because we are used to handouts.

US aid to Pakistan increased after Musharraf left. And yet, the debt went up and GDP growth fell.

US+Foreign+Aid.jpg



 

Flash_Ninja

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He got a bankrupted pakistan
It was miracle turn around mostly because of 9/11 almost all debt was refinanaced

One can however argue that he could have gotten a better deal
For xample the zardaris and nawqz milked uncle sam far more then he did(zardari era and nawaz era foreign aid was twice as compared to him)


Nope
Transfers are open book
Most of aid came after 2008 in form of kerri loger bill and CSF of around 2b/month

Its pitty that he subsidzed stuff during fanancial crisis of 2008 that led to a breif crash but overall it wasnt a big crash

What about forgiving debt, low interest loans, and favourable trade agreements?
 

ziaulislam

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US aid to Pakistan increased after Musharraf left. And yet, the debt went up and GDP growth fell.

US+Foreign+Aid.jpg



Conspiracy theorist will always says nawaz sharif got nothing and mushi got everythibg

They think like pakistan usa has money laundering black books worths billions of dollars
 

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