Economic Growth under Pervez Musharraf

Under Pervez Musharraf, Pakistan saw unprecedented growth and strength.  Here are just a few examples of the country’s accomplishments under Pervez Musharraf.

Economic Growth

  • Salvaged a near bankrupt economy and transformed it into the four fastest growing economies in the Asian region along with China, India and Vietnam.
  • Pakistan’s economy grew at an average rate of 7.0 percent per annum.
  • The performance of large-scale manufacturing was unparalleled in the country’s history. It grew at an average rate of 11 percent per annum.
  • Services sector grew at an average rate of 6.0 percent per annum.
  • Because of strong economic policies, Goldman Sachs a global investment bank, included Pakistan in the category of new emerging market (Next – 11) destined to play a major role in the world economic setting.
  • Goldman Sachs extended their coverage from BRICs (Brazil, Russia, India and China) to eleven emerging economic powers including Pakistan, Korea, Mexico, Vietnam, Turkey etc.
  • Pakistan’s per capita income doubled (from $ 526 in 1999-2000 to $1085 in 2007-08). In other words, the average income of Pakistani people more than doubled.
  • The size of the economy more than doubled (from $74 billion in 1999-2000 to $170 billion in 2007-08) as well.

Investment

  • Succeeded in turning around the economy with the help of Pakistan’s private sector. Constant engagement built the confidence of the private sector on economic management.
  • Investment as a result rose from 17.4 percent to 22.9 percent of GDP – an increase of 5.5percent of GDP in seven/eight years is unparalleled in recent times in Pakistan.
  • Foreign Investment surged from $0.5 billion to $8.5 billion – a 17 fold increase in 8 years which reflected the growing confidence of foreign investors in Pakistan.

Unemployment & Poverty

  • The government succeeded in creating 13.5 million new jobs and accordingly reduced the unemployment rate from 8.3 percent to 5.2 percent.
  • Strong economic growth succeeded not only in creating new jobs but reducing poverty. That is, poverty reduced to one-half. The number of people living below the poverty declined from 34.5 percent in 2000-01 to 17.2 percent in 2007/08.
  • Income inequality also started narrowing after 2005-06.

Inflation

  • Inflation averaged 5.5 percent during 2000-2007.

Deficit and Debt

  • Tax collection by the Federal Board of Revenue (FBR) tripled – increasing from Rs 308 billion to Rs.1025 billion.
  • Overall budget deficit as percentage of GDP reduced to almost one half.  Budget deficit averaged over 7.0 percent of GDP during the 1980s and 1990s but was reduced to an average of 4.0 percent of GDP, thus reflecting financial discipline.
  • The country’s debt burden reduced to one – half. National (Public) debt was over 100 percent of GDP by end of the 1990s but reduced to 55 percent by 2007.
  • In the words of the IMF “The large and sustained decline in the external debt to –GDP –ratio was one of Pakistan’s most remarkable macroeconomic achievements of recent years”.
  • Debt servicing used to consume 64 percent total revenue in 1998-99. By maintaining financial discipline and reducing budget deficit, we succeeded in bringing it down to 25 percent only. In other words, the resources saved from debt servicing were diverted towards development program.

External Sector

  • Both exports and imports grew at higher double –digit-levels.
  • Foreign exchange reserves increased from $500 million to over $16 billion – a sixteen fold increase in reserves.
  • Exchange rate remained stable as a result of the build up of foreign exchange reserves.
  • Remittances continued to grow from less than $1.0 billion to over $6.0 billion.
  • Pakistan’s international credit rating continued to improve from selective default to B+.
  • Pakistan was taken out of the IMF program in December 2004.
  • We re-entered the international bond and equity markets by floating Eurobonds and Global Depository Receipts (GDR). We also succeeded in floating a 30 year Eurobond which showed the confidence of the global investors in Pakistan.
  • We pursued a successful privatization program for state-owned enterprises (SOEs).

Stock Market

  • Karachi Stock Exchange emerged as one of the best stock exchange, in emerging economies. The Karachi Stock Exchange Index surged more than 11 times – rising from 1189 in October, 1999 to 13998 in November 2007. This represented the growing confidence of the private sector (both domestic and foreign) on economic management.

SOCIAL SECTOR

Education

  • Overall Literacy Rate increased from 45% to 55% during 2000-01 to 2006-07.
  • Male literacy rate increased from 58% to 67%.
  • Female literacy rate increased from 32% to 42%.
  • Gross enrolment at primary level (5-9 years) increased from 72% to 91% – an increase of 19 percentage points.

Higher Education

  • The state of higher education in Pakistan was in a pathetic condition. We had 48 universities; the number of Ph.Ds and engineers per million population was only 112 –about one – third of the minimum standards prescribed by UNESCO. We had only 2600 science Ph.Ds and the country was producing barely 50-60 per annum.
  • A multi – pronged strategy, including the establishment of Higher Education Commission (HEC) was launched.
  • We provided substantial resources to higher education. The development budget for higher education increased from Rs. 500 million to Rs. 14 billion in 2006-07.
  • Number of universities increased to 130 in 2006-07 from 48 in 1998-99.
  • Number of students enrolled in universities increased from 276 thousands to 948 thousands – more than three fold increase in enrolment in universities.
  • Number of Ph.Ds produced by Pakistani universities increased sharply to 624 from as low as 50 – 60 per annum.
  • There were 3800 students sent abroad for higher education (Ph.D) in foreign universities, of which, 303 have completed their degrees.
  • 3508 students enrolled in Ph.D Programs in Pakistani universities, of which 336 have completed their programs.

Health

  • Various Health indicators also improved. For example, children aged 12-23 months immunized increased from 53% in 2000-01 to 76% in 2006-07.
  • Life expectancy increased from 63 years in 2000 to 66.5 years by 2008.
  • Infant mortality rate declined from 83.3 per 1000 infants in 2000 to 65 by 2008.
  • Social Sector and Poverty – Related Expenditures Increased from Rs. 167 billion (3.8% of GDP) to Rs. 500 billion (5.7 % of GDP).

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