http://www.dawn.com/2001/05/21/ebr6.htm
Ishrat Husain, a Director of the World Bank and currently on loan as governor of the State Bank of Pakistan (SBP), has been credited with coining a term, 'the lost decade', which describes the state of the economy and much more, during the decade of the 1990s.
Unlike the governor of the SBP, who has only recently shifted temporarily to Pakistan, many of us who actually lived in Pakistan throughout the 1990s, actually suffered as a consequence of the lost decade, though those who knew had warned of what was likely to happen. While it may surprise many of those who did not live here through the decade of the nineties, it is not at all surprising, that we are where we are today. Without doubt, in many ways, the 1990s has been Pakistan's worst decade yet.
Indicators of Pakistan's economic failure are numerous and well documented. Just a small selection of these indicators reveal the marked reversal that has taken place in the economy in the 1990s, not just in absolute terms, but more importantly, in contrast to the 1980s: the growth rate in GDP fell from an average of 6.5 per cent over the decade of the eighties to 4.6 per cent in the 1990s, with the rate being even lower, only 4.1 per cent in the last half of that decade. Inflation which has never been a real problem in Pakistan, was in double digits for most of the nineties; unemployment almost doubled from around 3 per cent in the 1980s to closer to 6 in the 1990s; and investment and growth in industrial development, particularly in manufacturing, has shown negative trends.
Poverty has emerged as a serious economic and social issue in the last decade whereas the poverty level fell in the seventies and eighties; the proportion of the poor below the poverty line almost doubled in a brief span of only 14 years, between 1987-2001. Development expenditure has fallen by almost a third in real terms from close to 9 per cent of GDP in the early 1980s to less than 3 per cent of GDP in the last two years. Whichever way one looks at it, most trends reveal that there has been a substantial turn-around in Pakistan's economic performance in the last decade compared to earlier decades... [...] How did all this happen? What brought about the worst decade in economic terms in Pakistan's 50 years? The incumbent military government would have us believe that this has happened because: there has been excessive political instability in Pakistan throughout the 1990s (eight governments in all), there has been a substantial deterioration in government/public institutions, corruption has been rampant and overall, there has been a serious problem of governance. These views are shared, perhaps not so surprisingly, by officials of the World Bank, the IMF and other international financial institutions. Perhaps there is a degree of truth in these explanations, and one certainly cannot dismiss them. However, I feel that while the decade of the nineties was truly 'lost', the explanations lie elsewhere.
There is a growing tendency in this country to blame all ills of the economy on the IMF and the World Bank and on other international financial institutions. While we give the IFIs far more credit than is their due and the extent of blame is greatly exaggerated, they must surely be held responsible for much of the current state of Pakistan's economy as they have probably been the most dominant and influential of the group of institutions in the country for much of the last decade.
The 1990s has been the decade of the policies of the IFIs. I emphasise the policies far more than the institutions themselves, primarily because when one argues that it is the IMF and the World Bank who have been running the show, apologists for the IFIs turn around and say that Pakistan is a one-tranche country, with 11 agreements in the last decade, with none being completed: ergo, the IFIs can't be held responsible. While Pakistan has rescinded numerous agreements with the IFIs over the last decade, its policy has always been to get further loans from these organisations... [...]
This has meant, that they have had to agree to numerous, and now increasing, conditionalities in order to get even the first tranche of a loan. The policies of the 1990s have been those of stabilisation and adjustment, and the agenda of all governments since 1988 has included, inter alia: a drastic cut in the fiscal deficit, a cut in development expenditure, privatisation, downsizing, getting prices 'right' and letting the market dominate, higher 'market-adjusted' utility rates, lower tariffs, the removal of subsidies, increased across-the-board taxation, liberalisation, devaluation, and a host of other initiatives.
It can be shown quite easily, how each and all of these policies and tools affect the economy. The growing evidence that is available shows extensively that, for the most part, the outcomes of following these policies has had dire consequences for the economy. Whether it is the obsession to cut the fiscal deficit resulting in almost no money available for development, or tariff cuts which may have accentuated the disease of sick industries, or for that matter, getting prices 'right' for utilities, making Pakistan's products more expensive and less competitive internationally, numerous problems which caused the 1990s to be lost, can be traced to the time of the dominance of the policies of the IMF and the World Bank on our economy, a decade ago.
The lost decade was lost by all those governments which followed the policies of the IMF and of the World Bank. They were ably assisted by advisers, a prime minister and caretaker ministers on loan (or retired) from these institutions who, while 'serving' Pakistan, pushed these policies through. As a consequence of the rot that has set in, the present military government is far more desperate and is pushing even harder than any of the elected governments of the past, for loans, advice, and for the policies of the IMF and World Bank to be implemented in Pakistan. Moreover, the ubiquitous presence of high profile advisers on loan from these organisations and foreign banks, seems to be another reminder of the past. Are we in for another 'lost' decade?
Full Stories http://www.dawn.com/2001/05/21/ebr6.htm
__________________________________________________ Do You Yahoo!? Yahoo! Auctions - buy the things you want at great prices http://auctions.yahoo.com/