THE State Bank?Ts Annual Report for 2002-3 comes as close as possible within the bounds of protocol and good manners to saying that the Government of Pakistan has been telling untruths about poverty. For the last six months, various government figures, from the President down, have been drumbeating a downturn in poverty, a decline of 0.8 percent (though the baseline and the new poverty figures are carefully kept vague). The State Bank nails this claim, and exposes it for what it is: an attempt to gloss over the harsh realities of today?Ts economy. The State Bank Report warns quite bluntly against ?oindulging in false pretensions and fanciful speculations? and notes that reductions in poverty cannot be expected until the growth rate is maintained above 6 percent. At the present rate of 5.1 percent, the Report warns, the incidence of poverty may be held steady. Within these theoretical parameters, it is clear that the government?Ts projection for GDP in the current fiscal, of 5.3 percent, is not going to reduce poverty, not even the Finance Ministry again forces the Federal Bureau of Statistics to massage the poverty figure yet again to produce a politically acceptable result.
The Musharraf-Jamali economic management team has been tirelessly working the media, trying to project certain favourable indicators, owed more to post-9/11 windfalls rather than brilliance of policy or strategy, as proof that the economy has revived, even though the ground realities for almost all 150 million Pakistanis are impoverishment, lack of opportunities, and increasing difficulty in making both ends meet. The State Bank?Ts comment on this strategy is only fair, that it is important for the country ?oto have realistic expectations rather than false pretensions.? The harsh reality is that the government?Ts economic policies over the last four years have increased poverty, despite the 9/11 windfalls, because they have been aimed at stabilising government finances, no matter what the social cost. The centrepiece of these policies has been a servile obedience to the dictates of the IMF, whose doctrinaire monetarism was allowed free reign in the ironically named Poverty Reduction and Growth Facility. The result has been such a comprehensive shattering of business confidence that almost no fresh private investment is coming forth.
The State Bank Report defends the government as being unable to make up the deficiency in investment necessary to move the economy to the growth patterns needed to reduce poverty, because the private sector also needs to contribute. However, in such deflationary times, the government needs to use any fiscal space created to spend on development, to generate jobs and create an environment in which the private sector might come forward to invest. The marginal decline in inflation, from 3.3 percent in 2001-2 to 3.1 percent in 2002-3, indicates the economy has not yet emerged from the deflationary phase. Without abandoning blind adherence to budget deficit targets, the economy cannot be moved towards a higher growth plane, and poverty will continue to rise. The State Bank Report, and current government policies, produce no room for optimism. Editorial - The Nation. |
