musharraf developed Pakistan because of US aid ~ myth busted

[W.11]

Riaz Haq | Facebook
Musharraf bashers who don;t have a clue of the facts continue to argue Pervez Musharraf achieved economic and human development progress simply because of US aid. They need to understand that the US aid has quadrupled since 2008 but progreess has slowed to a crawl in this period.

 

[blain2]

you cannot double up the GDP of the country with foreign aid. Fundamental restructuring took place in many segments to achieve the growth.

Dr. Atta ur Rehman's article in The News is fairly insightful about some of the aspects mentioned above:
Lest we forget - Dr Atta-ur-Rahman

 

[farhan_9909]

Musharaf was a person with vision.

From less than 500millions in reserves when he took out noora,Within just 5 years china's Got a new Growth challenger

China's New Growth Challenger Is Pakistan: Mukherjee (Correct) - Bloomberg

According to figures released over the weekend by Pakistan's Prime Minister Shaukat Aziz, the $110 billion economy is estimated to have grown 8.4 percent in the year ending on June 30. Among the world's 10 most-populous nations, that rate is exceeded only by China, where gross domestic product expanded 9.5 percent last year. India recorded 6.9 percent GDP growth in the 12 months ended March 31.

Just imagine if we had 8.4% growth rate as average since 2004 to present.GDP i am sure would had been no less than 400billion dollars by now

 

[FaujHistorian]

US dollars/euros are starting point for every developing country.

What you do after the start is what really matters.

Mush was good

But I don't to praise him or hate him.

We now have an elected gov

We must support and cherish it

otherwise we will loose it to some other fiasco.


peace

 

[Developereo]

We now have an elected gov

We must support and cherish it

It's a two-way street.

We let Zardari have his five years, and are still wondering what he did in all that time...

I think we all agree that NS should be given space to do his thing, and then we will judge him on his deeds.

 

[HAIDER]

I think that little aid is insignificant for Pakistan. Plus, these aids are soft loan and they need to be pay back in certain period of time. There is no free launch in the world. Plus the conditions are attached with these aid program. All projects are approved by one agency and hardly any role of govt in their.

 

[FaujHistorian]

It's a two-way street.

We let Zardari have his five years, and are still wondering what he did in all that time...

I think we all agree that NS should be given space to do his thing, and then we will judge him on his deeds.

Oh Bhai sahib

Na moon khulwao Gaddha-ri kay kartooton per

Our office of presidency is a joke. It should be abandoned.

Most of the "presidents" we had did nothing but eat and $hit in the presidency.

--- well we can probably say that about our 90% MNAs doing the same in NA and MPAs doing the same in PAs but that will need a separate thread.



Tarar was a $tupid president too and so was the his first lady.

Lots of inside stories my man.

Lots and lots.


Bottom line is.

We should not bring Mush the general in today's politics.

It sullies the whole damn thing.

We have enough politicians to do the $hit. Generals should keep out of it.




Ordinary Pakistanis will do well to behave like Chinese ordinaries, or S Koreans people, or Indian masses.

That is just do our job with hard work

and let the politicians take the credit.


Hope this makes sense.

If not

Well we have whole saturday to waste

 

[FaujHistorian]

I think that little aid is insignificant for Pakistan. Plus, these aids are soft loan and they need to be pay back in certain period of time. There is no free launch in the world. Plus the conditions are attached with these aid program. All projects are approved by one agency and hardly any role of govt in their.

Haider bhai sahib

it is not "aid", it never was. We are not Somalia or Sierra Leon that we need aid.

USA may be called Uncle Sam, but he is not our chacha or mama that it will give us free goodies.

It is unfortunate that so many Pakistanis goof up on this. But

You are not alone, even big name oxford graduate Pakistanis fail to understand the difference between aid and AID.

Bhai sahib

USA provides "AID" that is short of "Assistance for International development".

This "assistance is in return for Pakistani "assistance" to USA for its "international projects".

In other words this is a dollar aka hard currency payment to Pakistan for supporting and assisting USA.


This assistance comes as a large package of approximately $10-12 billion for any year that Pakistan "ACTIVELY" helps USA.

Some of it is direct cash around $2 to $3 billions

Some of it is soft loans $3-4 billion

The rest is a mix of trade and other cash payments to our military.


Considering our nation's total dollar income of $20-25 billion a year, USA assisstance is HUGE covering almost 50% of the dollar/euro portion.


Without our dollars/euros, we are dead in the middle of ocean, as we cannot pay for petrol, gas, food, chemicals, and military purchases.


So I urge you not to post such childish comments about dollar income.

Our rupee is worth a $hit (like every other developing country) so we have to have a minimum of $25 billion a year.

Zardari Gaddhari's problem or other politicians problem is that they cannot mobilize Pakistani masses to work for international trade and services.

And thus we gravely suffer during civilian rules.

During military rule, military generals can mobilize almost 1 million man Pak army/rangers/FC etc to do the work for international projects and thus bring home the badly needed dollars/euros.

Hope this helps you understand the dire economic situation of Pakistan.


Peace

 

[HAIDER]

Haider bhai sahib

it is not "aid", it never was. We are not Somalia or Sierra Leon that we need aid.

USA may be called Uncle Sam, but he is not our chacha or mama that it will give us free goodies.

It is unfortunate that so many Pakistanis goof up on this. But

You are not alone, even big name oxford graduate Pakistanis fail to understand the difference between aid and AID.

Bhai sahib

USA provides "AID" that is short of "Assistance for International development".

This "assistance is in return for Pakistani "assistance" to USA for its "international projects".

In other words this is a dollar aka hard currency payment to Pakistan for supporting and assisting USA.


This assistance comes as a large package of approximately $10-12 billion for any year that Pakistan "ACTIVELY" helps USA.

Some of it is direct cash around $2 to $3 billions

Some of it is soft loans $3-4 billion

The rest is a mix of trade and other cash payments to our military.


Considering our nation's total dollar income of $20-25 billion a year, USA assisstance is HUGE covering almost 50% of the dollar/euro portion.


Without our dollars/euros, we are dead in the middle of ocean, as we cannot pay for petrol, gas, food, chemicals, and military purchases.


So I urge you not to post such childish comments about dollar income.

Our rupee is worth a $hit (like every other developing country) so we have to have a minimum of $25 billion a year.

Zardari Gaddhari's problem or other politicians problem is that they cannot mobilize Pakistani masses to work for international trade and services.

And thus we gravely suffer during civilian rules.

During military rule, military generals can mobilize almost 1 million man Pak army/rangers/FC etc to do the work for international projects and thus bring home the badly needed dollars/euros.

Hope this helps you understand the dire economic situation of Pakistan.


Peace

Few friends work for multiple congressmen sponsored USAID program in Pakistan long ago. Eventually all money goes back to US. Very top Pakistani take advantage rest goes back and rest pay back.

 

[SQ8]

Much more academic and educated summation of Musharraf's economic miracles rather than some blog. This was published in 2008 just after the PPP government took over so no excuses of them ruining a beautiful palace work for this report.
Naval Postgraduate School
http://faculty.nps.edu/relooney/Rel-TOSJ-08.pdf

This is a report by the Naval postgraduate school in Montrey.. just in case some people decide to bring up issues with the stature of the school.

Some key points highlighted by the report:

The February 19, 2008 election defeat of Pakistan’s President Pervez Musharraf was not a major surprise. When asked to list the most important issue for voters, most observers of the Pakistan scene would list factors such as:
(a)the deteriorating security situation evidenced by the increase
in terrorist attacks over the past year,
(b) the suppression of civil rights through President Pervez Musharraf's heavy-
handed sacking of the country's top judges,
(c) the unpopular partnership with the United States in the war on terrorism,
(d) the rise and spread of extremism, and (e) the suspicious
assassination of former Prime Minister Benazir Bhutto.
Surprisingly, for most voters a more basic set of issues prevailed:
People were angry over the fact atta [flour] was not available, that food prices were high, and due to this they felt insecure. It's a familiar lament in Pakistan these days. We are worried about terrorism and those other things, but
first we are worried about basic needs. People want a person who can fix this problem

The report is not emotional and biased like most of the members posting here.. it acknowledges a lot of things.

Musharraf's regime embraced globalization making structural reforms, opening the country to investment and trade.The results surprised even his most ardent supporters -- the size of the economy increased by almost 50 percent, with income per-capita up by nearly 25 percent. Cities and towns seem to be booming. The country managed to recover impressively from the devastating earthquake in 2005 [6]. In short, the economic paradox of Musharraf’s fall from grace is that the country’s economic performance was commendable by most standard measures:

•In the last several years the economy has grown at rates
between 7.0% and 7.5%.

•The share of industry in GDP rose from 22.6% in 2000 to
26.7% in 2006.

•The annual percentage growth in industrial value added
as doubled.

•The share of gross fixed capital formation in GDP has
increased by three percentage points.

•The services sector has posted an impressive perform-
ance, with annual growth of the value added in services
nearly doubling over the past seven years.

•There are now 82 mobile phone subscribers per 1,000
people up from two in 2000.

The report also states:

..objective evaluations of the country’s economic performance during the Musharraf years are difficult as a mixed picture emerges.Clearly objectivity over the Musharraf programs has been colored by divergent perceptions – the product of a sharply polarized political environment [9]. Most observers of thencountry’s attempts at economic progress during this period
fall, into two broad schools of interpretation: (1) the take-off school, and (2) the failed take-off school. Another school of thought, the structuralist or demolition school contends that
no real acceleration in growth occurred under Musharraf –simply put, growth under Musharraf was the result of a number of fortuitous events – post 9/11 aid flows, good weather, high remittances from workers in the booming Gulf countries and the like. There is an element of truth to this
interpretation. However, the high rates of growth achieved in Pakistan over the last five years cast considerable doubt on this interpretation – it simply doesn't go far enough in explaining the economy’s recent dynamics.

Highlighting the take off school(or Musharraf's supporters):

The Take-Off School noted above contends that the economic expansion initiated under Musharraf did not occur all of a sudden, but instead was the outcome of deliberate and carefully designed program of economic reforms undertaken(and some ongoing) during the first five years of the Musharraf era. The program consisted of four key elements [14]:
1. Restoration of macroeconomic stability and Pakistan’s
relationship with the international financial institutions.
2. Structural reforms to remove distortions
3. Improving economic governance and reviving key insti-
tutions
4. Poverty alleviation through targeted interventions and
social safety nets

... With this strategy in place, the take-off school led by Prime Minister Shaukat Aziz, Ishrat Hussain, Governor of the State Bank of Pakistan and the supporters [15] of thebMusharraf Reforms and the IMF took heart in a long list of initial successes:

•The fiscal deficit, which averaged 7.0 per cent of GDP
for two decades, is expected to declined to 3.8 per cent in
the fiscal year (2002-03).

•Domestic debt, which was growing at an average rate of
24.0 per cent and 16 per cent per annum during the 1980s
and 1990s, respectively declined slightly in 2002-03.

•Domestic debt as percentage of GDP has declined from
52 per cent in 1999-2000 to 39.3 per cent in 2002-03.

•Tax collection has increased by Rs152 billion during the
last four years as opposed to Rs 82.5 billion in the previ-
ous four years, an increase of 84 per cent. From an aver-
age increase of 4.6 per cent per annum during 1996-99,
tax collection has grown at an average rate of almost 14
percent per annum during the next four years.

•Inflation at 3.1 per cent in 2002-03 was below the target
of 4.0 percent. It is much lower than the average of 10
percent in the 1990s.

•Private sector credit is up by 19 per cent during 2002-03.

•Stock market remained buoyant during 2003, reaching
the record level of 3100 (KSE index). It had been one of
the world’s best performers in the early 2000s [16].

•Industrial production is up by 8.0 per cent during July-
February 2002-03.

•Investment is likely to rise to 16 per cent of GDP and
economic growth is projected at 4.5 per cent - higher than
the average of last three years (3.3 per cent during 1999-
2000 to 2001-02).

•Both exports and imports have picked up despite uncer-
tain global environment. Exports are up by 20 per cent
and imports are up by 23 per cent during July-March
2002-03. ............

In short, the Take-off School contends [18] that by 2002-03 macroeconomic stability had been achieved, both investment and growth were rising; interest rates were falling; inflation was low; private sector credit had picked up; both domestic and external debt levels were declining; exports
were picking up, tax collection was rising, current account bbalance was in surplus; and the exchange rate was stable.
.......................
Vision 2030 [21] provides some detail of the longer-term changes envisaged by the Take-off School: [22] Growing economically at a rate of around 7-8 percent per annum, Pakistan expects to join the ranks of middle income countries, with a GDP of around USD 4,000 by 2030. This high growth rate would be sustained through developing its human resources and by developing the necessary physical and technological infrastructure.The growth trajectory will gain momentum by the latent
capacities of a sizeable middle class emerging in the development process. Besides sustaining high growth rates, benefits of growth are planned to be equitably distributed and poverty to be largely eliminated.

The report uses available global metrics and not skewed or self made figures to show why this did not turn out as hoped.

Unfortunately for the take-off school things did not turn out the way proponents envisaged:

•The Planning Commission’s ambitious expectation of a 7.5-8.0 percent GDP growth in 2007-08 did not occur and has been revised to 6.5%. The reasons given have ranged from high international prices and inflation to a widening of the current account deficit and increased external debt.

•Rising prices of food items, combined with shortages of sugar, oil and flour, a looming power and gas crisis also worked to dampen the Musharraf economic expansion.

•Industrial growth has dipped to an average of 6 percent in the last several years with the critical textile sector showing signs of weakness.

•The agricultural sector still employing a large share of the workforce has not expanded as hoped resulting in increased food insecurity for large segments of the population.

In sharp contrast to the take-off school, the failed-takeoff school, while acknowledging the macroeconomic accomplishments of the Musharraf years, feels that the Musharraf strategy as actually applied did not adequately implement its economic strategy outlined above [23]. Instead
its programs resulted in the creation of more distortions in the economy and society [24]. Combined with the country’s latent governance and institutional deficiencies the result was the creation of serious imbalances throughout the economy. In turn, these imbalances are the source of much of the violence and discontent currently destabilizing the economy in particular and Pakistani society in general.

@Aeronaut @Secur @VCheng @Dillinger Continued....

 

[W.11]

i think in my view, the democracy will only work if we make all the COAS as the president who will keep a very watchful eye of the performance of these democratic leaders, so in constitution we should make amendments like any elected govt will not choose its lackey as president rather any COAS will be automatically made the president

in this way we will have an authority who will not suck for five years seeing government fail, and it will have a good danda on their performance

similarly we should make amendments like the along with federal/parliament elections votes will also be casted for local government simultaneously

in this way the local govt will not depend on the elected govt to fullfill its promise of holding local body elections

 

[SQ8]

Talking about the viewpoint of the failed take-off school..i.e. those who believe Musharrafs policies did not have the effect they intended nor did they actually improve things.

The leading proponent of this school is Shahid Javed Burki, a former Minister of Finance and World Bank Vice President who feels that despite early positive signs [25] the Government missed a golden opportunity in the 2005-06 budget to put the country on a new growth path.........

The failed-take off school views the main advantage of the Musharraf economic policies as implemented to be its pro-business orientation of allowing the private sector considerable room in which to operate. While this policy unleashed considerable entrepreneurial activity, it should have
been accompanied by on-going improvements in governance, economic freedom and financial reform – all necessary requirements to complete the takeoff and continue on a path of sustained growth and development

While some reforms in both areas did take place, there are major areas where governance and economic freedom actually deteriorated during this period. For example, the World Bank considers improved governance in five key areas as critical for increases in efficiency and higher investment rates needed to achieve sustained growth (1) voice and accountability, (2) political stability, (3) government effectiveness, (4) regulatory quality, (5) rule of law and (6) control of corruption. Unfortunately, Pakistan’s progress during the Musharraf years was spotty and inconsistent, especially in comparison with India’s relatively steady progress during the same period.

So according to this school of thought and on the World bank index, Musharraf's tenure did not improve much on the KPI(Key performance indicators) for progress. Adding further to this schools contention are the following indicators:

Trade liberalization progressed under Musharraf, but import bans and restrictions, import taxes, inconsistent standards administration, non-transparent government procurement, export subsidies weak enforcement of intellectual property rights and corruption add considerably to the cost of trade. The net effect appears to have undermined the government’s efforts at becoming more integrated into the world economy. Between 2003 and 2007 Pakistan declined from the 50th most globalized country to 63rd.This deterioration in relative globalization was across all dimensions of globalization, economic, personal, technological and political. To the country’s credit, the declines in some areas were not as great as those experienced by its South-Asia neighbors, India, Sri Lanka and Bangladesh. Unfortunately, in the other areas of economic freedom, Pakistan suffered significant reversals during the Musharraf years. Major declines occurred in investment freedom, financial freedom property rights and freedom from corruption during this period. The lack of significant financial reform during the Musharraf years is confirmed by the country’s rankings in the Milken Institute’s Capital Access Index . This index indicates measures the extent to which countries are creating the conditions necessary for firms to raise capital. Specifically countries are ranked in terms of how well they support economic activity by providing businesses with access to capital, both domestic and foreign [29].For the index as a whole, Pakistan ranked in 65th in 2003– that is firms in 65 countries had better access to capital than those in Pakistan. By 2007 the country had fallen to 72nd place. Even more troubling the Milken assessment of the country’s macroeconomic environment, the focus of the Musharraf programs had achieved only marginal improvements in recent years, improving its ranking from 112th place in 2005 to 104th by 2007. In equity market development the country fell from 15th place in 2005 to 40th by 2007. A similar situation occurred in bond market development where the country declined from 52nd place in 2005 to 63rd in 2007. No doubt the failure to reform and develop the financial system has contributed to the country’s relatively low savings rate and its inability to channel investment into the most productive sectors of the economy – two critical areas needed to sustain rates of growth in the 6-8% range.

while the country has been able to attract more foreign investment most of these funds did not go into the export sector but instead went into activities satisfying domestic demand. This will produce problems for the future since it will likely increase pressure on the external accounts. This stems directly from the lack of reforms in the trade area limiting the extent to which has been integrated into the world economy

Clearly, Not everything was gold during the Musharraf era and the curtain of consumerism hushed up actual decline in economic development. But that is not the only story.. the critical aspect of Pakistan was the energy issue:

The regime also failed to put in place a strategy that takes care of the supply bottlenecks that would inevitably result from a sharp increase in GDP. In particular the government failed to plan to meet the supply-demand gap in the energy sector for both electricity and gas. By 2006-7 the situation had developed into a full blown crisis. Electricity shortages caused many firms to maintain shorter hours with distinct losses in output. There was mounting concern that the power shortage would affect the productive capacity and export performance of the country.

In all fairness to the Musharraf administration the energy crisis did not emerge all of a sudden and it is the result of neglecting the supply side for the past few decades. Beginning in the early 1980s, the gap between the consumption and generation of electricity steadily expanded, but no augmenting measures were initiated [31]. Nor until very recently were the energy problems facing the country examined in any sort comprehensive way [32].

On the other hand the Musharraf administration has done little to help broad In an exhaustive study of the country’s infrastructure situation, the World Bank was forced to conclude: [33]
Pakistan suffers from a dearth of infrastructure in the water, irrigation, power, and transport sectors; infrastructure which is essential for sustained growth and competitiveness both in the local and international markets. The gaps between demand and supply in these sectors are alarming. Unless plans are put in place urgently, these critical shortages could lead to increased social discontent and disharmony amongst the federation and the provinces.

So essentially, this school argues that the supposed progress actually waxed over Musharraf's failure to sort the true problems the country was facing. Like a alcohol induced euphoria, the main diseases were ignored in favour of this short lived party. @Aeronaut @Secur @VCheng @Dillinger

 

[SQ8]

The Problems hushed aside during the Musharraf era were not just confined to Macroeconomic failures and power problems as the failed take-off school contends. The issue of the tax base did not seem to receive any attention at all:

The tax base remains narrow and rather inflexible.The Musharraf government failed to realize that major fiscal reforms were needed to prevent growth from widening income inequalities and failing to pull large segments of the population out of poverty [34].

•Only around 2% of the population pays direct income taxes with the bulk of the tax burden falling on the poor,the salaried class and the business sector. Around 70% of tax revenue is generated by indirect taxes that are generally considered regressive.

•There is a mismatch between sectoral contributions to growth and tax revenue. Agriculture contributes 22.5% of GDP, but only 1.2% of tax revenue as compared with manufacturing, which contributes 18.% of GDP, but 62% of revenue from taxes.

•Tax evasion is widespread. The exemption of agricultural incomes from direct income taxes is believed to be an important source of tax evasion, for example, enabling industrialists to hide income by buying agricultural property.

•Agricultural incomes have subject to tax exemptions since 1886. The prime beneficiaries of agricultural tax exemption are large landowners. Approximately 40% of the labor force is employed in the agricultural sector, but over half of the rural population is landless. In addition to paying more than their fair share of taxes, there is a reason why the poor did not benefit as much from the Musharraf economic expansion. This was due to the fact that growth came from the sectors which did not provide much employment to lower income groups.

Further to this, the report highlights a critical factor which the failed take-off school contends is responsible for a major drain on the economy.

Another area where the Musharraf administration failed to make any progress at reform was the country’s sprawling military industrial complex or Milbus. Over the years, Pakistan’s military has expanded its holding of industries, properties and foundations. These organizations guarantee the
armed forces both organizational autonomy and a regular flow of resources from the public and private sectors – often to the enrichment of senior officers, both on-duty and retired. The military has come to control 11.58 million acres of state land or 12% of the total. Much of this is rented at very low fees to its personnel. The estimated total wealth of this sector varies but may be as high as $100 billion and no doubt expanded even further during the Musharraf era. From an economic perspective these activities are nothing like the leading industries in Rostow’s take-off stage. Instead, Milbus places a tremendous drag on any economic expansion:
The presence of the military in the private sector or in profit-making activities results in en-
couraging crony capitalism in the country. This creates a situation where the dominant classes collude with the military to benefit from the state and its resources at the risk of ignoring all those who are not part of the ‘elite consensus

Is the red not exactly what is happening in Pakistan??

The report concludes by presenting the two opposing views and drawing its conclusions.

Given the difficulty, the country has had over the years in sustaining high rates of growth, the Musharraf programs and reforms will no doubt be ultimately judged on the quality of the institutions put in place. Are these institutions capable of fairly resolving many of the conflicts that have repeatedly derailed the economy? Will they permit continuity in economic policy? Will they strengthen democracy, enabling all segments of society better access to public services and opportunities? Will they enable the country to finally have a successful economic transition to high sustained growth?

The pro-administration, take-off school contends that through its macroeconomic stabilization policies and progress in economic and governance reforms the country is now positioned to sustain high rates of economic growth –the previous boom bust pattern of growth made a thing of the past – the recent slow-down of the economy simply reflects the political uncertainty prior to the election. Now that that has been resolved the country will quickly resume the rapid pace of growth of the last several Musharraf years.

The failed take-off explanation while acknowledging the many economic successes of the Musharraf years contended that the administration did not make enough progress in governance and supporting growth enhancing institutions for growth to be sustainable. Even worse, the Musharraf government’s polices and actions not only failed to address mounting constraints, but in many cases only served to aggravate them.

From the vantage point of early 2008 it may be premature to provide a final judgement of the Musharraf economic policies. However a large body of evidence points toward their failure. Certainly, dissatisfaction with the performance of the economy was one of the main reasons for his fall from power and while some of his reforms have yet to be completed they are unlikely to create the conditions for high sustained grates of growth.

Essentially, Musharraf's era was nothing more than a failure to exploit a window of opportunity. In credit, Shaukat Aziz's efforts till 2003 had helped fix some issues..but after that it seemed that mismanagement and lack of actual interest in improving the country took over. The illusion that was the consumerism fuelled economic advance was bound to fall... and this country was to head to worse states due to it.

@Aeronaut @Secur @VCheng @Dillinger

 

[SQ8]

@Oscar what ever the failures million times better than present

That is an attitude to bury your head. You will never progress.. by that logic .. Pakistan was a bad idea and Muslims should have stuck around in India.

@Armstrong get out of the racial mess and do some intelligent reading here.

 

[Armstrong]

@Armstrong get out of the racial mess and do some intelligent reading here.

Huuunh...what racial mess ?

I've read some of these things & I agree that there seems to be an impression that Mush's Economic Policies weren't exactly as sound as they are made out to be but I suppose the succeeding 5 years were more of a Biblical reckoning then anything else & so in comparison Mush's time seems great !