Focus on fight against poverty

Rehmat Bibi, 67, is a widow who lives on private charity and a meagre monthly stipend from the government. Her total monthly income does not guarantee that she will sleep on a full stomach or be able to buy medicine. Outside the office of a government-run charity managed under the Islamic system of Zakat - an obligatory deduction of alms from rich Muslims for distribution among the poor - Bibi told IRIN she was desperate. "I am old, I am tired and want to rest," she said. For Bibi, like most Pakistanis, the circle of poverty never seems to end. She recalled when she was young and working at people's homes, how her employers would give her left-over food. Saving money for her old age was simply out of the question. "Now I am old and unable to work, I have to depend on charity," she regretted. Bibi's case is typical of millions of impoverished in this South Asian country. Only some of them have access to the Zakat programme under which a destitute person is given just US $8 per month - barely enough to buy a month's supply of wheat. The poor have to fend for themselves for rent, other food items, medicine, clothes and transport. "It's a good system but not sufficient to end poverty," Ilyas Lodhi, a retired senior government official involved with social welfare programmes, told IRIN. "Most of the time they are women, particularly widows, divorcees or old and sick who apply for Zakat," he explained. But charity is a short-term solution to a more lasting problem. Despite recent positive indicators of an improving economy, economists told IRIN, Pakistan's fight against ever-increasing poverty is going to be a long one. "There is light at the end of the tunnel," well-known economist A.R. Kemal told IRIN. "But the tunnel is very long." Since gaining independence from Britain in 1947, Pakistan has come a long way in most of its macro and micro economic indicators - all sectors registering manifold growth. However, an increasing population, now estimated at 140 million, has swallowed most of these gains and few benefits have trickled down to the masses. In fact, statistics indicate that poverty levels in 2000/2001 are the same as they were in 1964 - 40.2 percent. This despite the fact that in 1987/1988, only 17.3 percent of the population was living below the poverty line. Economists say there are a number of reasons why such gains have not reduced poverty. Economist Kaiser Bengali told IRIN from the port city of Karachi that the policy of stabilisation of the economy came at the cost of growth and poverty. Although unofficial unemployment figures are higher, according to an annual report produced by the private Social Policy and Development Centre (SPDC), the official unemployment rate, which increased from an average of 3.5 percent during 1981-1990 to 5.7 percent during 1991-2000, rose to 6.7 percent in 2000-01. The statistics it highlights - obtained from official releases - are startling and portray a dismal picture. "Consequently, the percentage of the population below the poverty line, which had fallen from 31 percent in 1979 to 17 percent in 1988, rose again to 33 percent in 1999," it noted. Kemal said there were several reasons for the increase in poverty in the country and these same reasons make it extremely difficult to eradicate it. "The stabilisation has been achieved at the cost of significant national sacrifices and thus we should not allow destabilisation of the economy," he noted. "Pakistan's economy at present may be characterised by strong financial macroeconomic fundamentals," he said explaining the underlying fiscal deficit was under control, growth of money supply was in the single digits, inflation was 2.6 percent and the foreign exchange reserves had exceeded US $6 billion. And while stabilisation has contributed to the difficulties of the common man and increased poverty, it has also been unable to draw foreign investment, crucial for the overall economic growth. "The policy of pursuing stabilisation at the cost of growth in unemployment and poverty has been socially damaging," SPDC said. It also said the investment trends in Pakistan over the last decade-and-a-half have not been very encouraging. "Poverty reduction is primarily a function of employment generation, which itself is a function of growth in investment," Kemal said. Economists agree that investment holds the key to sustained economic development, providing the necessary capital to generate growth and employment in an economy. "But in Pakistan the investment to GDP-ratio declined from an average of 17.8 percent in the 1980s to 16.1 percent in the 1990s, and further to 13.6 percent during 1999/2000," he added. Political instability, repeated changes in government policies, nuclear tests in May 1998, tariff rows with private power producers, hostilities with neighbouring arch-rival India, as well as a host of other factors, have scared away foreign investment and tarnished the country's image abroad. Development economists argue that in the absence of investment, the government should have pursued an aggressive public development programme - even if it was not in line with stabilisation and structural reforms. "Public investment or the development expenditure component of fiscal outlays has a significant relationship to the rate of private investment as well as growth," Bengali said. He maintained that for the last several years successive governments had ignored this. While Islamabad has budgeted US $2.23 billion for development in the fiscal 2002/03 (July-June) period it may raise this figure further by another US $166 million if it can find the money to do so. But Bengali said this still wouldn't be enough to win the battle against poverty. "The government needs to invest more in development," he noted. "There is a slight increase but it is grossly insufficient. It should be at least 200 billion rupees [US $3.33 billion]," he concluded.