Magazine article Washington Report on Middle East Affairs

Pakistanis Differ over Nawaz Sharif's First Year in Office

Magazine article Washington Report on Middle East Affairs

Pakistanis Differ over Nawaz Sharif's First Year in Office

Article excerpt

Pakistanis Differ Over Nawaz Sharif's First Year in Office

Upon completion of its first year in office on Feb. 6, 1998, Pakistani Prime Minister Mian Nawaz Sharif's Muslim League government claimed: "We stopped institutionalized corruption, massive political victimization and VIP culture" and "completed a year of economic consolidation, including gaining the confidence of international financial institutions like the International Monetary Fund and the World Bank." The Pakistan People's Party (PPP) of his predecessor, former Prime Minister Benazir Bhutto, retorted: The year was marked by "downsizing, devaluation, drift, demoralization, descent into anarchy and destruction." In fact the truth lies somewhere between the two statements. Pakistan is not in a state of anarchy and destruction as the PPP charges, nor is it by any means out of the woods in terms of economic recovery and restoration of law and order, as claimed by the Muslim League.


Closer to the truth was a strongly worded letter to Finance Minister Sartaj Aziz from a senior vice president of the World Bank who complained: "Economic growth remains sluggish...Reportedly there is a significant shortfall in tax revenues...Serious deterioration in the Water and Power Development Authority's (WAPDA) financial situation threatens the fiscal situation at a time when Pakistan's economy is highly vulnerable to balance of payments deterioration."

Among the ills that beset the economy are a high degree of tax evasion causing poor revenue yields, financial crisis in the public corporations, no growth in the industrial sector and the near absence of an investment market. The government has conceded that there has been a revenue shortfall of Rs. 11 billion ($234,042,553), but objective estimates place it at Rs. 30 billion ($638,297,872).

The IMF has pointed out that the "informal" or underground economy constitutes 22 percent of the Gross Domestic Product (GDP). Since this stays outside of the revenue collection system, it deprives the government of a huge chunk of taxes.

The two factors that receive the most public attention at times of fiscal stress are the percentage of the national budget that goes into defense expenditures and the portion of the budget consumed by debt-servicing costs. In Pakistan these two items consume 80 percent of the total national budget. Defense expenditures have always been treated as a sacred cow that cannot be touched, while there is no way to reduce the debt servicing costs without first reducing the national debt itself.

To top it all, Prime Minister Sharif is determined to carry out his two favorite heavy expenditure projects -- an inter-state motorway and the rebuilding of the Islamabad and Lahore airports. What is being questioned about these projects is the flirting and their cost, especially when the country is faced With a dire economic emergency. Sharif, however, is unyielding.


In-country planners and foreign aid-giving agencies have always had serious difficulties in making good estimates because of the absence of reliable raw data in most developing countries. Often the lack is attributed to the archaic methods of data collection and lack of properly trained staff. Unfortunately, politics also plays its part in concealing truth to serve vested interests.

For two decades, no national census was conducted in Pakistan for all of the above reasons. Each successive regime promised the count, but postponed it to suit its political ends. State interests, regional considerations and even local exigencies have prevailed over sober counsel. But, finally, the census is underway in Pakistan.

Already, however, doubts have been cast on the sincerity of the effort, thereby bringing the outcome into question in advance. The army has been invited to assist in carrying out a door-to-door head count. Several groups have protested against military involvement in such a purely civil operation. …

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