• Monday, June 17, 2019

Pakistan Economic Disaster and real culprits

Discussion in 'Pakistan Economy' started by volatile, May 16, 2019.

  1. volatile

    volatile SENIOR MEMBER

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    https://www.dawn.com/news/1482443/?...Sa1pahPMcOfgdaPtgV1nrSkh0aySod4YlXk8H9w1CMdWs
    Surprisingly its Pervaiz Musharaf/Aziz tenure
    Which political party has been the best for Pakistan's economy? Trade stats reveal all

    [​IMG]

    The Musharraf regime governed from 1999 to 2008.

    It was followed by the five-year rule of Pakistan Peoples Party (PPP) whose tenure ended in the first half of 2013.

    Pakistan Muslim League – Nawaz (PML-N) governed from 2013 to the summer of 2018.

    And finally, Imran Khan took oath as Pakistan’s 22nd prime minister on August 18, 2018. However, the data is available only up until 2018 and hence trade under the PTI government is not included in the chart.

    Busting myth 1: In truth, Pakistan’s trade statistics from 1999 to 2008 suggest a disconnect with the popular narrative of 'tremendous economic growth' under General Musharraf.

    Statistics suggest that trade increased under the Musharraf regime. However, starting from 2003 to 2004, one could also see a widening gap between imports and exports.

    The economy during the Musharraf regime benefited from American financial support that increased considerably after 2001.

    The US economic assistance to Pakistan from 2001 to 2008 equalled $4.4 billion. Although, the more significant influx of funds was military assistance, including the Coalition Support Funds, which totalled $9.5 billion for the same period.

    This massive influx of foreign exchange is likely to have impacted the trade statistics.

    Nevertheless, it's the year 2004 that is quite important and relevant to our current discourse on Pakistan’s economy.

    The PTI government blames the PML-N (2013 – 2018) for the massive trade deficit, where the imports far exceeded the exports.

    While it is true that the trade deficit increased both in absolute and relative terms under PML-N, the PML-N economic leadership dismisses these concerns citing the increase in the import of machinery and equipment for CPEC-related projects.

    But a relevant question to ask is: is the trade deficit solely the responsibility of the PML-N government?

    Overview of PPP govt
    Let’s return to 2004. The trade deficit that started to increase under General Musharraf, widened even further under the PPP government — only to reach greater magnitude under PML-N.

    Busting myth 2: The same trade statistics help us further challenge the narrative that PPP has not been a good steward of the economy.

    PPP formed a government during the Great Recession in 2008, when global trade was on a decline. Despite assuming power under challenging conditions, during its tenure, the PPP government increased imports and exports.

    The PPP regime faced two significant challenges: first, ubiquitous terrorist violence across the country created an environment not conducive for growth or investment.

    Second, the PPP government could not resolve the infrastructure deficits whose most apparent manifestation was blackouts that hit the industry hard. Had PPP been able to address these challenges, it could have made a more significant impact on trade.

    PML- N inherits deficits
    Busting myth 3: Where the PML-N had propagated an image of being better minders of the economy, the trade statistics do not agree with the sentiment.

    The PML-N formed a government in 2013 when exports were rising. However, the first few years of the PML-N rule experienced a decline in exports while the imports remained flat. It was only in 2016 that the imports started to increase and the exports followed, albeit with a lag.

    PTI reframes the narrative
    The PTI government took control in 2018 when Pakistan’s imports and exports were both on the rise. It will be interesting to see how the PTI government will manage trade over the next four years.

    PM Khan promised change and change he has delivered, repeatedly: in the last nine months, he has changed his finance minister, the governor of the State Bank and the head of the Federal Bureau of Revenue.

    But will the changes at the top have a trickledown effect at the bottom? Only time will tell.

    Verdict
    The data clearly shows that the trade deficit started to become a problem in 2003 to 2004, under General Musharraf.

    Thus, PML-N can’t be solely held responsible for the trade deficit. The structural changes in the economy, which predated the PML-N regime, are partly to blame. However, the trade deficit reached unprecedented proportions under PML-N rule.

    Surprisingly, trade statistics also show that the PPP regime, despite harsh global economic conditions, grew imports and exports.

    While data provides perspective and context, the discourse surrounding Pakistan's economy lacks substantial statistical data and evidence.

    Based on solid numbers, the PTI government will be judged and evaluated for its performance. Myth-making will not be sufficient.

    Murtaza Haider is a Toronto-based academic and the director of Regionomics.com.
     
  2. Path-Finder

    Path-Finder ELITE MEMBER

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    This article doses an excellent job of giving the tooi party and then peepee a proverbial clean 'chit' The problem started in mushararraf era. But it was made worse in peepee and then bodhi puncture dar who made it import economy and spent 22 billion to artificially keep the rupee down.
     
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  3. VCheng

    VCheng ELITE MEMBER

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    Looking to the past and finding a favored target to assign blame will do nothing to change the future.

    What Pakistan should do now to have a better future is where the attention should be placed.
     
  4. nahtanbob

    nahtanbob SENIOR MEMBER

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    even if started under Musharraf the civilian governments had a decade to fix this
    this is assuming the trade deficit is the root cause of all problems
     
  5. Abdussamad

    Abdussamad FULL MEMBER

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    The article you posted says the exact opposite:

    His regime made the same mistake many other Pakistani administrations have i.e. they used borrowed dollars to keep the rupee overvalued thereby subsidizing imports, punishing exporters and further indebting the country.