According to the recently released United Nations Human Development Report 2014 titled "Sustaining Human Progress: Reducing Vulnerabilities and Enhancing Resilience", Pakistan has retained the objectionable ranking of the lowest within the region at 146 in the category of low income countries. Sri Lanka, ranked in the high development category, was awarded a significantly higher ranking at 73 which, no doubt, seriously compromises the validity of the standard normal raison d'etre offered by our governments (past as well as present) for blaming terrorism/insurgency for their poor performance in improving human development index components that include, life expectancy, education, health and income level.
The typical response of Federal Finance Minister Ishaq Dar with respect to government's failure to improve the human development index (HDI) is that after the 18th Constitutional Amendment social sectors were devolved to the provinces; and it is no longer the centre's responsibility. While this is certainly true yet the Finance Minister fails to consider his inordinately heavy reliance on provincial surpluses to meet the federal budget deficit targets agreed with the International Monetary Fund (IMF): 2013-14 budget envisaged Rs 23 billion as a provincial surplus which was revised upward to Rs 183 billion by the end of the fiscal year while in the current year's budget the provincial surplus is earmarked at Rs 289 billion. Or in other words, not enough allocations are possible with the pressure on provinces to generate surpluses. In addition, the salutary anticipated effects of the 18th Constitutional Amendment with respect to reducing the annual federal budgetary allocations to those ministries that have been devolved have also not been achieved. In other words, the devolved ministries have neither led to a commensurate decline in the federal annual expenditure and nor has this constitutional change led to greater allocations by the provinces to improve the quality of life of people. Be that as it may, Dar may do well to recall that prior to devolution the centre's annual allocation on HDI components particularly education and health had been well below the minimum proposed by the United Nations and this situation prevailed even during Nawaz Sharif's government when the Finance portfolio was held by Dar.
The UNDP report also notes that 2.2 billion people world-wide are subjected to growing inequality and structural vulnerabilities with responsibility laid at the doorstep of financial crisis, natural disasters, soaring food prices and violent conflict; however, it acknowledges that poverty is on the decline. Of relevance in terms of reducing poverty levels is the IMF's recently downgraded global growth forecast - from 3.7 percent in April to 3.4 percent. The reason, some negative surprises from China and the US and geopolitical risks associated with ongoing conflict in the Middle East (Iraq, Syria and Israeli attack on Gaza) and Ukraine. In this context it is relevant to note that Pakistan has projected a growth of 5.1 percent well above the global average and this projection pre-dates the Ukrainian and the Middle East crisis.
While the IMF has projected a growth of 4 percent for Pakistan in the current year (IMF's assessment of GDP growth for 2013-14 was 3.3 percent as opposed to the government's unrealistic 4.1 percent) yet even if one takes the over ambitious government target of 5.1 percent for the current year as having been achieved the heavy focus on reducing the deficit through generating provincial surpluses would dampen growth and not raise the HDI. Dar in his second budget as well has failed to strike a balance between growth and deficit reduction for which the vulnerable would pay the heaviest price.
Friday, August 1, 2014
Pakistan: poorest in the region
According to the recently released United Nations Human Development Report 2014 titled "Sustaining Human Progress: Reducing Vulnerabilities and Enhancing Resilience", Pakistan has retained the objectionable ranking of the lowest within the region at 146 in the category of low income countries. Sri Lanka, ranked in the high development category, was awarded a significantly higher ranking at 73 which, no doubt, seriously compromises the validity of the standard normal raison d'etre offered by our governments (past as well as present) for blaming terrorism/insurgency for their poor performance in improving human development index components that include, life expectancy, education, health and income level.
The typical response of Federal Finance Minister Ishaq Dar with respect to government's failure to improve the human development index (HDI) is that after the 18th Constitutional Amendment social sectors were devolved to the provinces; and it is no longer the centre's responsibility. While this is certainly true yet the Finance Minister fails to consider his inordinately heavy reliance on provincial surpluses to meet the federal budget deficit targets agreed with the International Monetary Fund (IMF): 2013-14 budget envisaged Rs 23 billion as a provincial surplus which was revised upward to Rs 183 billion by the end of the fiscal year while in the current year's budget the provincial surplus is earmarked at Rs 289 billion. Or in other words, not enough allocations are possible with the pressure on provinces to generate surpluses. In addition, the salutary anticipated effects of the 18th Constitutional Amendment with respect to reducing the annual federal budgetary allocations to those ministries that have been devolved have also not been achieved. In other words, the devolved ministries have neither led to a commensurate decline in the federal annual expenditure and nor has this constitutional change led to greater allocations by the provinces to improve the quality of life of people. Be that as it may, Dar may do well to recall that prior to devolution the centre's annual allocation on HDI components particularly education and health had been well below the minimum proposed by the United Nations and this situation prevailed even during Nawaz Sharif's government when the Finance portfolio was held by Dar.
The UNDP report also notes that 2.2 billion people world-wide are subjected to growing inequality and structural vulnerabilities with responsibility laid at the doorstep of financial crisis, natural disasters, soaring food prices and violent conflict; however, it acknowledges that poverty is on the decline. Of relevance in terms of reducing poverty levels is the IMF's recently downgraded global growth forecast - from 3.7 percent in April to 3.4 percent. The reason, some negative surprises from China and the US and geopolitical risks associated with ongoing conflict in the Middle East (Iraq, Syria and Israeli attack on Gaza) and Ukraine. In this context it is relevant to note that Pakistan has projected a growth of 5.1 percent well above the global average and this projection pre-dates the Ukrainian and the Middle East crisis.
While the IMF has projected a growth of 4 percent for Pakistan in the current year (IMF's assessment of GDP growth for 2013-14 was 3.3 percent as opposed to the government's unrealistic 4.1 percent) yet even if one takes the over ambitious government target of 5.1 percent for the current year as having been achieved the heavy focus on reducing the deficit through generating provincial surpluses would dampen growth and not raise the HDI. Dar in his second budget as well has failed to strike a balance between growth and deficit reduction for which the vulnerable would pay the heaviest price.
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