Surviving Musharraf's Exit?

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The spike in food prices, in Pakistan, started around Oct/Nov last year. It is not clear as to why this spike came about. Therefore, formulating a policy to tackle it is difficult. I would like to be a bit of an optimist here and propose the following thesis.

Around a year and a half back (???) the govt. overestimated the GROWTH of wheat, sugarcane etc. Expecting a fall in inflation, private distributors stored (hoarded if you may) more than what was necessary. Usually such co-ordination in storage is difficult. But the announcements induced this simultaneous co-ordination. Now, given this spike in prices, it is in the incentive of each distributor to let out what has been stored SLOWLY.

If what I hypothesize above is true, then an "annoncement" to import wheat may bring out the stored goods and thus end the spike. In fact, so much so that there is no need to import. However, the 'announcement" has to be credible and it is here that there is a small problem. Global prices (including transportation costs) are high and the one time lump sum subsidy announced by the Saudis (for oil) is not enough to slacken budgetary pressures. Furthermore, India also is facing inflation driven by agri. prices so importing from India (at a lower transportation cost) may not be feasible. These constraints on feasibility may lessen the "credibility" of a govt. import policy. Thereby not improving supplies.

Nevertheless, in my opinion, the govt. should go ahead and announce that it will import "food". Hopefully, it will increase local supplies and the policy need not be carried through.

In my opinion the smuggling of wheat and sugar into Afghanistan is not very big. And it cannot be stopped in the short run.

Re: # 173
With tremendous economic growth in emerging economies like China, India and Pakistan, there is a global surge in demand for commodities including food, fuel and metals. In a globalized world, no country or economy is immune from the resulting hyperinflation. The nature of the problems we deal with now are very different from late 1990s. The old prescriptions need to be updated to take into account new realities. I am not particularly sanguine about Mr. Dar's leadership on economy, given that he left the country bankrupt and debt-laden. Pakistan's external debt exceeded its GDP in 1999. Musharraf and Aziz worked hard to bring the debt-to-GDP ratio to about 50% in the last few years and doubled the GDP at the same time. While Musharraf-Aziz admin did mistakes leading to our current crises of wheat and energy, we must acknowledge that a large part of the crises stem from the global hyperinflation that every country and region of the world is suffering from.

Riaz Haq, PakAlumni Worldwide

#178 Posted by GT,

GT, I reproduce an extract from my #6 on this board:

Re wheat, the shortage occurred solely due to allowing private export of fictitiously vast excess quantities at higher international prices than domestic. Pakistan is not only self-sufficient in wheat and has been for decades, but even meets Afghanistan's demand.

Even if it was an administrative error,it was unpardonable considering the crisis it created. The same thing happened in case of Sugar too in 2006, so it's difficult to believe it wasn't a scam. Shaukat Aziz should be extradited to answer how this happened.

Riaz Haq, PakAlumni Worldwide ...

haha. All I can say unless this idiot comes up with specific questions.

#178 Posted by GT on April 1, 2008 7:02:48 am


the govt. overestimated the GROWTH of wheat,


If the definition of overestimate was changed to "pulled a number out of their rears to show a certain GDP growth rate" then yes, they overestimated it..

http://www.dawn.com/2007/09/24/ebr2.htm

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The reality was reported in the paki press. It was even posted on a paki blog..

if the vast majority of pakis are too self-deluded(or chutiyas) to close their eyes to the reality, there's nothing anyone can do..

take, for example, the paki government's claim on per capita income..even an ivy league grad like manto was into the whole self-delusion thing..

Real income growth lags behind Asia

By Yousuf Nazar

Pakistan ranks as the seventh most dangerous country after Iraq, Sudan, Israel, Russia, Nigeria, and Columbia in a 121-nation study by the Economist Intelligence Unit.

While such rankings can be subjective (it may be the 10th or 11th), this is not good news for the government which claims that Pakistan has made unprecedented economic progress during its tenure, recording one of the highest GDP growth rates.

The reality is Pakistan’s per capita GDP growth has been one of the lowest in Asia and below the average of all low-income countries during 1999-2005, when measured in purchasing power parity terms as per the data in the World Bank’s Development Indicators released on April 15, 2007.

The government uses statistics to make claims that cannot stand simple logical test and independent validation. For example, it cites the rise in per capita GDP to $833 in 2006 to support its claim that incomes have doubled in the past 6-7 years and Pakistan will soon become a middle-income country. This is simply misleading. The analysis based on the World Bank’s statistics reveals the true picture of the economic growth in Pakistan relative to the other developing countries.

A widely recognised indicator of the level of prosperity is gross domestic product (GDP) on purchasing power parity (PPP) basis. Since nominal prices of different goods and services vary from country to country, this method of measurement neutralises those nominal differences by comparing what a similar basket of goods and services would cost in different countries. Hence, GDP measured on purchasing power parity basis is considered a more accurate measure of income level and standard of living.

As shown in the graph, Pakistan’s yearly per capita income growth rate was only 4.62 per cent during 1999-2005 and lagged behind not just India’s 7.3 per cent but also that of similar developing countries with large populations, like Indonesia, Turkey, and the Philippines. These growth rates were derived from GDP per capita data on purchasing power parity basis, as published by the World Bank.

While one-year data should not be used to comment on longer term trends, the above data for the six years belies government’s claims about one of the highest growth rates in the world and confirms the belief that the benefits of growth during the recent years have been somewhat eroded by a persistently high inflation. It is only logical that Pakistan with one of highest inflation rates in the developing world should see a slower growth in the real incomes and living standards when the rest of it is growing at 6-7 per cent with lower inflation averaging about 4-5 per cent compared to Pakistan’s 8-9 per cent. Hence these indicators are unlikely to change materially in one or two years.

Other important World Bank development indicators (2005) also confirm the view that Pakistan remains behind its peers as shown below:

RiazHaq #179 Why do you have this urge to defend a dictatorship while attacking the representative government? the dictator had 8 years of absolute rule. dont join hamidm in giving the demcratic 100 days to fix the mess.

ferozk #169 Actually, on one of the two major issues facing pakistan (wot, economy), you dont need to wait 100 days: the democratic government has already done what the usurper couldnt do in 8 years - taking ownership of the wot as being Pakistan's problem, rather than trying to make it appear that Pakistan wouldnt be fighting this war if it wasnt for US pressure. And it has put in place a political process so Pakistan's policy is based on its own security needs in the first instance, and its commitments under international law in the next.

On the economy, it has started on the right foot by making cutting of government expenditures a top priority. Thus, instead of 70 ministries under musharraf and shaukat aziz, it has started with only 24. this will no doubt go up, but i would be surprised it comes anywhere close to the usurper's government. Same for military expenditures and so forth.

I am really amazed at the number of Pakistani posters who seem clueless on the basics and keep thinking of a lawless dictatorship that gave them nothing but increased law and order problems, lavish government expenditures as some kind of a gift from heaven while spitting on the people's reps.

The interesting thing is that outside Pakistan musharraf was treated as a useful but smelly tinpot at best. One who had to be bullied and bribed into doing the right thing by the same Bush administration that is now (per Rice) prepared to wait for the National Assembly to debate the wot and form a policy. In other words, to treat Pakistan as a sovereign nation that has a right to consider its national self interest. This is what the civilian government has achieved even before the 100 day countdown started!!

Riaz Haq, PakAlumni Worldwide,

Let's start here:

#179: Pakistan's external debt exceeded its GDP in 1999.

I say Pakistan's foreign debt in 1999 was $30b, and GDP $56b. You say foreign debt exceeded GDP.

Once you refute this contention, we will go on to your next piece of nonsense.

what does taking ownership mean, tahmed? Does it mean, fighting the jihadis or making deals until teh americans whack them?

... in case anyone is interested, the Paris Club rescheduling was negotiated by this same Ishaq Dar in 1999, which was implemented only in 2002 because of involvement of dozens of multi-lateral creditors, and short-cut took credit for it.PPP knows that too very well. Of-course these idiot chowkies wouldn't have a clue.

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So the argument being made is that that we have to fight WOT, because economy is bad. I think previous argument, during Q-league version of this government, was that, economy is good because of the WOT. In other words "jithay di khoti...".

I think it is quite obvious now that those people cannot become an agent of change who caused the disaster in the first place. Isn't it quite obvious that the corrupt, pro-western ruling elite is the greatest beneficiary of a system of haram-topi. Why would they want to change this system when it has benefited them so much. No matter what they do, the system allows them to get away. No matter how corrupt, how incompetent they have been, the system once again puts them in charge. No questions asked.

But in my opinion they do not have 100 days, they only have 30 days or less before they will start getting blown up, like their fouji predecessors. The advise to them is quite simple: change or Natural Selection will eliminate you.