Farrukh Khan Pitafi’s Official Website « SS Mushi may sink Pak economy/rupee too

SS Mushi may sink Pak economy/rupee too

Musharraf has always shown great concern for the economy of the country. Indeed economic progress was self professedly the most important objective of his military coup. He then seemed to have great dislike for his predecessors for they had been responsible, in his view, for bringing economy into “deep trouble”. His economic objective stated in his October 17, 1999 were as under:
- “Rebuilding of investors’ confidence through stability and consistency in economic policies,and economic security. The objective is to encourage the local investors, overseasPakistanis and foreign investors.
- “Increase domestic savings.
- “Carryout pragmatic tax reforms
- “Turn around the state enterprises towards profitability
- “Boost agriculture and revive industry
- “Strict austerity measures”.
It is unclear how much can he claim have accomplished out of these objectives. We know today that the major crises during his regime were also triggered by economic issues. For instance the reason behind the sacking of the chief justice and the origin of the constitutional crisis was the legal bottlenecks in the privatization of the steel mills.
After almost 9 years of his rule the economy is still in shambles. While there was a point in time when he used to claim that the economy had been revived we now know that most of that was mere window dressing. clearly Musharraf is not a financial wizard himself. He had to rely on his economic lieutenants like Shaukat Aziz to get some understanding. A visible gamble for there was an element of blind trust involved. Despite criticizing the Bretton Woods system Shaukat did what his masters in the World Bank and the IMF dictated him to do. It was his idea that the emergency be imposed in 2007. As a consequence he has left behind a weak rupee and a dwindling economy. While his policies had brought short term improvement in the macro indicators, Governor State Bank Dr Shamshad Akhtar perhaps immitating Alan Greenspan kep increasing the interest rates and hence ensured that the liquity left in the market disappears at once. So deja vu.
In fact today’s economic situation is quite helpful in understanding the happenings of the late eighties and the entire decade of nineties. When a democratic government took over after General Zia’s death, it was quickly dubbed as financially corrupt and inept and hence dismissed. The subsequent elected governments were also dismissed on the same charges. It was claimed that Zia had left the economy stable and the successive democratic governments were responsible for the staggering foreign debts of the country. Meanwhile the establishment’s white elephant kept swallowing dollars upon dollars. Quite a few people realized that the foreign debts were due to the foreign wars Pakistan had accepted to fight, the money spent on political maneuvering by the establishment and also owing to the structural deformities in the system. Today however the establishment has been caught with its pants down. It is now clear that the financial crisis that afflicts the country today had started during the reign of Musharraf’s handpicked government. And this fact remains no matter how much Musharraf’s Chamchas shout.
While it might be instructive the situation is still recoverable. What does a market really fear the most? Instability and uncertainty. Musharraf’s presence in the presidency is a permanent destabilizing factor. If he does not leave by Sunday the bourses, Pak rupee and the economy in general will further sink and may god forbid collapse. For the sake of the country and the economy Musharraf should quit. Let it really be Pakistan first.