Human development report calls for changes in the economy

Years of high-deficit spending have taken their toll on the Pakistani economy and pushed it to a point where reversing the damage caused is going to be very difficult, according to the author of the latest human development report for South Asia. "Because of years and years of misgovernance and high-deficit spending, public spending for consumption and not for investment, it is taking its toll, so it's gotten to a stage now where to reverse it is going to be very difficult," Khadija Haq, economist and principal author of "Human Development in South Asia 2003 - The Employment Challenge", told IRIN in the Pakistani capital, Islamabad on Tuesday. The report has been prepared by the Mahbub-ul-Haq Human Development Centre - named after the late Pakistani economist who pioneered the United Nations Development Programme's (UNDP) annual human development reports - which is now run by Khadija, his widow. "The Employment Challenge" is the seventh such report prepared by the centre since it was set up in 1995. After a 30-year period starting in 1960 when Pakistan's growth was high for a low-income country, "such growth as has occurred, has been associated with very inadequate performance in terms of human development indicators," the report said. "The Pakistani pattern is indicative of growth without development because despite its 'respectable' per capita growth over the second half of the 20th century, the country has systematically underperformed on most social and political indicators, such as education, health, sanitation, fertility, gender equality, corruption, political instability and democracy," it added. However, after decades of mismanagement and a protracted "low" period, especially during the 90s when, according to Haq, poor systems of governance and high-level corruption combined to lead the Pakistani economy into a downward slide, the situation has improved somewhat. "Things have improved over the past two or three years. We've got what we call macro-stability and all the indicators are looking healthy: foreign exchange reserves have gone up, banks are performing better," she explained. "When this government came into power, its first job was what they call 'stabilising the economy' and reviving it, because the economy was on a downward slide. But, now, things are looking better," she added. Government projections now said that the growth rate might increase to well beyond five percent, a sign that things, indeed, were on the up, Haq said. "Now, they're projecting that the growth rate might go up to 5.4 percent from below two percent or three percent - which was even lower than the population growth rate. So the GDP rate was in the negative. From that level to have reached a stage where we will have an increase in the GDP growth rate is a good situation," she stressed. The problem with such macro-adjustments was that the world had become a global market-place, rendering workers in the so-called "informal sector" - where small scale producers and farmers proliferate in Pakistan - unable to come up to par with the new form of international competition, Haq maintained. "So that is creating more and more unemployment and the poverty level is rising," she added. However, reducing poverty was one of the prime objectives of the Pakistani government's current economic team, which had prepared a good strategy to that end, Haq said. "I'm hoping that we will see some reduction in poverty in the next couple of years. I'm hoping... one doesn't know. Because when you reach a GDP growth of five percent and over, then the poverty situation eases if it is supplemented by a good poverty reduction strategy plan. That's what we have at the moment," she said, matter-of-factly.