Monday, September 8, 2008

Pakistan - Time for the IMF?

Click to enlarge:


Citibank is right on the dot here as to why the current Fiscal as well as the External Sectors are in crisis. Only question is, why didn't their research reports ever say this before? Why only now?

The inevitability of the current economic crisis a few years down the road was plain to see since at-least early 2004.

Only reason I can see is now it's an advice for the Pakistani Government to go back to the IMF balance of payment support programme, which entails harsh fiscal measures, and great political and social cost as consequence.


Ijaz Gul said...

Even an illiterate like me who knew nothing of Economics protested the basic structural adjustment of Pakistan's economy by Shuakat Aziz between 1999-2001.
His Finace Secretary Mr. Younis Khan was a Masters in English and for one week could not provide the statistics of Pakistan's foreign debt. Yet within a month, he gave a very pointed presentation on how Nawaz Sharif used to fudge economic figures. It was all so pleasing to the military ears.

My arguement was simple. Pakistan had successfully withstood nuclear sanctions for 13 years, has a healthy GDP driven by the very vibrant/strong irregular cum parallel economy whose biggest strenght is being domestically competetetive. Infalation is below 5 and CIP healthy. We have an underperforming agriculture sector that must be improved at the basic level and value addition encouraged with rebates to our textle export sector. I also contended that we needed to evaluate the unbridled growth of economy versus documentation that must not be converted into a military exercise.

Alas all the wrong things were done and here we are. Shaukat hated me for whatever I said in Cabinet Meetings. Though Tariq Aziz was more receptive, I had a feeling that as a true bureaucrat he was just trying to learn. The top gun economists at PIDE never had their own views while Dr. Ashfaq the economic advisor held my views in high esteem, but he was just a machine that produced papers whose paras were read out by economic Czars.

Zeemax said...

It has been such a pity Ijaz Sahib. And of-course you're a witness to that.

Very simply put, the Shaukat Aziz/Dr. Salman Shah/Dr. Ashfaq combine opened up all avenues for outflow of sustained outflow of foreign exchange, but did nothing to match it with sustained inflows. This is why this crisis was so predictable and imminent.

Musharraf of-course was just a commando - knew nothing except what he was told by the above three - the GDP/FDI figures which he parroted on TV.

Ijaz Gul said...

In 2002, I was invited to give a talk on documentation of Pakistan's economy to MBA sudents of a university. To my surprise Dr. Ashfaq had recommended my name.
The Dean was Dr. Zafar Moen and revealed that he had actually wanted Dr. Ashfaq to give the talk, who instead had recommended me.

In 2006, I saw Dr. Zaffar giving expert comments on a TV Talk show about Pakistan's growing economy. Later, I confronted him by saying that the bubble was soon to burst. He agreed but asked how?

Please spare Dr. Ashfaq the vibes. He was not like me ready to commit suicide. But he laways talked facts.