=malaymishra123;182964]The foreign reserves of Pakistan are down, because under Musharraf's rule, Pakistan did not industrialize itself enough to beat the worldwide recession. Had Musharraf's government been able to do that, the foreign reserves though down would not have suffered as great losses.
What should he have done? Pakistan an agriculture country should have hijacked the industries of others to industrialize itself?
PAK had $10 billion foreign reserves when Nawaz was in power in 1998, and yet there was no industrialization. Nawaz mis-spent it all after atomic blasts and the reserves fell to $1 billion. Musharraf raised it to $16 billion and kept it intact.
Under Musharraf, Only in 2007, the Infrastructure Industries Index, which measures the performance of Seven industries, i.e. Electricity generation, Natural gas, Crude oil, Petroleum products, Basic metal, Cement and coal, has recorded a
26.2 percent growth in Industrial sector of Pakistan.
Under Musharraf, large scale manufacturing was 30 year high and Construction activity was 17 year high.
PAK became 3rd best in Banking profitablity.
IT industry inproved over 200% to become $2.8 billion worth.
Telecom industry attracted $10 billion investment and has magnified.
Here, many friends of mines confirmed that Rehman Malik asked the KHI KSE to pay Rs. 30 billion in a Dubai account or else the with-holding tax & other taxes exceeding Rs.30 billion will be imposed.The members paid Rs. 30 billion last month.
Is there any wonder why reserves are flying back or why investmnt is going back?
Inflation is high because the price of crude has risen astronomically. Inflation is a problem not only in Pakistan but has also broken the back of many other countries including India, where it has reached a 12 year high, Vietnam-15 year high and the same for China.
Yes, inflation is high worldwide due to crude. But, fiscal & monetary measures, and administrative measures are also required to control inflation. PAK is an agriculture country and does not import food items. In 2 months inflation has become 30 year high.
The value of the Pakistani rupee is down because it is directly proportional to inflation and inversely proportional the price of the crude oil which itself affects your economy directly.
Foreign reserves are kept in abundance, because in case there's an international oil shake... the currency will not devalue.
If your foreign reserves get depleted due to looting by government or mis-management....and there is an oil shake .... the currency devalues.
Dr Ishrat Hussein (former Governor State Bank PAK) says:
"Those who question us must realize that the reserves are not for spending purposes but are actually an insurance policy for the future. Let me give you a simple example: when we had reserves below $ 1 billion and if there was a oil price shock then whereby the price would have shot up from $25 a barrel to $50 a barrel, the rupee would have hit Rs. 80, 90 or even 100 to the dollar simply because we could not have sustained that kind of situation. However, today we have seen that although the oil prices have gone up to $58, the exchange rate has remained stable at around Rs. 59.50"
A conversation with Dr. Ishrat Hussain
So, save reserves to stabilize currency and control inflation.
There is ABSOLUTELY nothing, NOTHING, that this present govt or any other government could have done to prevent what is happening now after it had been handed the reins by Musharraf.
If they can do nothing ... they should be kicked out!
The least they could have done was to protect our Foreign reserves & keep it intact, and try to improve it further. If foreign reserves go down and there is an crude increase, the currency destabilizes.
A government should give time to economy & initiate fiscal and monetary polcies, interact with local business community, attract FDI, efforts to increase foreign reserves, control imports & boost exports.
Due to PPP's clue-less govt, the foreign investors are runing back. KSE lost $20 billion in 2 months. Rehman Malik blackmailing KSE is democratic negotiations?
Musharraf era, our economy:
Pak Economy in 1999 was: $ 75 billion
Pak Economy in 2007 is: $ 160 billion
Pak Economy in 2008 is: $ 170 billion
Pak revenue collection 1999: Rs. 305 billion
Pak revenue collection 2007: Rs. 708 billion
Pak Foreign reserves in 1999: $ 700 million
Pak Foreign reserves in 2007: $ 16.4 billion
Pak Exports in 1999: $ 8 billion
Pak Exports in 2007: $ 18.5 billion
KHI stock exchange 1999: $ 5 billion at 700 points
KHI stock exchange 2007: $ 75 billion at 14,000 points
Foreign Investment in 1999: $ 301 million
Foreign Investment in 2007: $ 8.4 billion
Our leader - Musharraf
Heck i could send Manmohan Singh, arguably India's best finance minister with his entire team including Chidambaram and they wouldnt be able to do much better.
India's GDP growth did NOT fall from average 8-9% even in this volatile situation you consider. India's exports did not fall. India's foreign reserves did not fall. India's FDI has not stopped. World recession momentarily hurt Indian Stock exchanges, but now its on path.
Pakistan's GDP fell from 7% to expected 5%. Pakistan's FDI decreasing. PAK's exports show no signs of increasing. PAK's foriegn reserves falling.
World recession did NOT hurt KHI Stock Exchange (only 2%) ... but this PPP government hurt KSE by approx. 20% with decrease of $20 billion.
They say a rising tide lifts all boats. The same is true for the economies. There was an increase in demand from developed countries for the past 10 years, and that is why Pakistani economy ALSO started increasing commensurately.
PAK was never a preferred destination for investment nor demend from developed countries. Bangladesh, India, Korea, China, Indonesia, Thailand, Sri-Lanka etc were more preferred.
PAK FDI and major economic indicators improved, increased due to Musharraf's credibility and macro-economic polcies, micro-finance handling and fiscal policy.
Pls read: Pakistan's Economic Success: Mercy of 9/11 or macro-economic policies.
Pakistanâs Economic success: Mercy of 9/11 or Macro-Economic Policies? « Our leader - Musharraf
Indian economy was also increasing dramatically along with China. What Pakistan did is not extraordinary but a result of a global boom.
Indian economy has been moving ahead since 20 years now. Sustainance made it surge to 9% GDP growth. There's nothing dramatic about it. Its years hard work by conglomerates like Birla, Mittal, Reliance, Sahara, Tata, InfoSys, Bajaj, Vipro, Birla, ICICI, etc.
Sure, Musharraf govt did clear and carry out reforms, but they were by and large limited.
IMF, WB praise Pakistan's economic and fiscal performance:
Pakistan Times | Top Stories: IMF, WB praise Pakistan's economic and fiscal performance
PAK economic growth bolstered world confidence: WB
Daily Times - Leading News Resource of Pakistan
World Bank Presdient praises PAK's economic achievements
World Bank President praises Pakistan's recent economic achievements.
IMF praise PAkistan
BBC NEWS | Business | IMF praise for Pakistan
ADB praises micro-finance in PAkistan
Daily Times - Leading News Resource of Pakistan
If these international institutions are praissing PAK for its micro-economic, macro-economic, fiscal polciies and implementation.... the praise goes to the government that formulated and practicised it!
Also, Dr.Ishrat Hussein said,
"There are, in my view, several important factors that attribute to this impressive growth rate of the economy. One of them, of course, is that there has been a continuity and consistency in the economic policies for the last 5 years to ensure that the investors and the entrepreneurs make business decisions with confidence that these policies will not undergo major shifts. That is extremely important for any investor interested in putting his money into this country. Secondly, there is a level playing field for every investor and every businessman. There are no SROs being issued to favour one group or the other and I think this has given rise to the healthy competition among the business community and many investors. Third, we have been carrying out structural reforms such as the privatization of the financial sector and many other institutions which we had been losing money and also taking steps to bring about massive economic stability like reduction in fiscal deficit, reduction in foreign debt and reduction in losses of public sector corporations. So you can see its a combination of several factors that have led to an impressive growth rate."
A conversation with Dr. Ishrat Hussain
Yes, they might be thugs, but your Army has not given your populace a chance to change them, to elect them out. They have not allowed new leaders to emerge. They have incubated a culture of radicalization to suit their needs. Thus you see that the new leaders who do emerge will be radical in nature, harming your country more.
Residing inside PAK we know what & who damaged our country more. These corrupt feudals who will again run away to Dubai, Saudia, USA, UK or France. The PAK army is PAK's sole saviour.
Democracy can work ONLY in a atleast 80% literate country.