As it celebrates the 60th year of its Independence Day on Aug. 14, 2006, Pakistan is again on the road of dynamic growth. Since 1999, when President Gen. Pervez Musharraf assumed power, he announced a seven-point agenda, designed to introduce reforms, improve governance and bring about an all-round development of the economy, in order to improve the life of the people.
From 2000, there has been an improvement in the rate of growth, which exceeded eight percent in 2005, being the second highest in the world. The per capita income has reached $800.
Prior to 2000, the economy was characterized by high fiscal deficits, the debt burden was consuming over 60 percent of the budget, and the foreign exchange reserves had fallen to an all time low. Exports were stagnating around $8 billion, and very little investment was being attracted.
Since then, the government has narrowed the fiscal gap and achieved a considerable increase in exports. The macro indicators have shown a remarkable transformation, with foreign exchange reserves exceeding $13 billion, the fiscal deficit falling below 4 percent, and the national debt reduced so that the annual burden of debt servicing fell below 25 percent. The Direct Foreign Investment reached the record figure of over $3 billion.
As the annual review of the economy, that preceded the presentation of the budget showed, the economy has continued to do well despite the disastrous earthquake of October 2005, that hit the northern part of the country and Azad Kashmir. An estimated 73,000 persons died while nearly 4 million were made homeless. Thanks to generous aid both from inside and outside the country, the task of rehabilitation and reconstruction is being carried out in an organized manner.
Like other parts of the world, Pakistan is facing the challenge of meeting rising demands of energy as well as water. The country has the largest integrated system of irrigation in the world, but as its population has quadrupled since independence, the requirements have increase as well. The Indus river system also provides a cheap source of electricity, and with rapid industrialization, the requirements for energy have also been rising fast.
A program of building five major dams has been taken in hand, to be completed by 2016, and the opening ceremony of the first one, the Bhasha-Diamir Dam in the Northern Areas has already taken place. Since 2000, the government’s economic strategy has been based on three pillars. These are liberalization, deregulation and privatization. This strategy has paid off, in the shape of higher growth, greater competitiveness and increased employment.
The problem of poverty exists, and is being addressed. The figure of those living below the poverty line has come down in recent years from 29 percent to 23 percent but greater investment into the social sector, including education, health and housing is necessary to eliminate poverty. Efforts in this regard need to be pursued at the global level, keeping in view the agenda adopted at the UN Millennium Summit.
Pakistan’s geostrategic situation is highly favorable for it to provide an outlet to the sea to countries of West and Central Asia. Located at the junction of South, West and Central Asia, at the heart of a region containing the bulk of the world’s energy resources, it is in a position to provide energy corridors to Central Asia and China.
It has joined a number of regional organizations, in order to participate fully in the development of a region containing about half the world’s population. As a result of the enlightened policies followed over the past six years, Pakistan can maintain a growth rate of 6 to 7 percent per year, and deal effectively with its challenges in the areas of development.
The best prospect for progress will lie in developing mutually beneficial links with its neighbors, especially Islamic countries of the Middle East and Central Asia. It has a special role to play in the development plans of western China, with which it is already linked by the Karakorum Highway, while the port of Gwadar is being developed with Chinese assistance.
The regional organizations like SAARC, and ECO provide avenues for cooperation that need to be developed, and Pakistan attaches importance to developing linkage to the Shanghai Cooperation Organization in the north, and ASEAN in the Southeast. The current century is being described as the Asian Century and Pakistan is strategically located to play its role in bringing progress and prosperity to Asia.