Shining Pakistan

MY WORD!

It has been an extraordinary and ironic contrast. At one level, the world is watching with disbelief as General Pervez Musharraf plays out a nuclear charade over A. Q. Khan, the so-called Father of the Islamic Bomb. The stories about flights to Timbuktu might almost have been churned out by a Hollywood scriptwriter of B-Grade movies. The embarrassment, obviously, couldn't be greater.

But at another level, teams of Pakistani officials and bankers are criss-crossing the world this week with sparkling economic statistics at their fingertips. In London on Thursday, Finance Minister Shaukat Aziz insisted confidently that Pakistan was raising a $ 500 million Eurobond mainly to build fences with international investors. It didn't really, he stressed, need the money immediately.

The Eurobond roadshows are really an advertisement to tell the world that Pakistan is on the comeback trail. And the country's financial managers led by ex-Citibanker Aziz have very real achievements to boast about.

A week ago Aziz handed over a $1.1 billion cheque to the Asian Development Bank (ADB) director in Islamabad. He's also telling anyone who'll listen that Pakistan's growth will top 6 per cent this year (the Pakistan financial year ends in June). That's way over the original target of 5.3 per cent. The latest figures come in the wake of 5.1 per cent growth achieved a year ago "" and that was the highest growth in eight years.

What's next on Pakistan's economic agenda? Privatisation. The Government has just sold a small stake in oil exploration company Oil & Gas Development Corporation. Others on the block include the Habib Bank which is being privatised and possibly the Pakistan State Oil Co (the country's equivalent of Indianoil). The Government hopes to earn around $ 2 billion from privatisation this year.

Gen. Musharraf's achievements on the political front are certainly questionable. But it's impossible to doubt the economic turnaround that has taken place on his ""and Aziz's "" watch. As Aziz handed over the billion-dollar cheque to the ADB, Musharraf reeled off a string of impressive statistics about the country's economy.

Four years ago, when he seized power in a coup that seemed hopelessly predictable, Musharraf inherited an economy in shambles. Around 64 per cent of the country's budget went on debt servicing and the country had a $ 4 billion dollar balance of payments deficit. In slightly over four years debt servicing levels have been slashed to 30 per cent. If that isn't enough, Pakistan also has around $ 12 billion in its foreign exchange kitty.

At the same time, the fiscal deficit has been razored from 8 per cent of GDP to a more manageable 4.6 per cent. To top all that, industrial growth has been around 11 per cent this year.

One result of this financial surgery is that the Karachi Stock Exchange has shot through the roof in the last two years. In 2002 it zoomed by 112 per cent and, in the process, was the world's fastest growing stock market for the year. On December 31, 2002 it closed at 2661. Slightly over a year later it is now hovering around 4900. Of course, it is important to add a qualifier "" the market cap of ONGC is around the same as the Karachi Stock Exchange.

Obviously, Musharraf and Aziz have been helped all the way by the international community. Pakistan, the ally in the War Against Terror, has had its loans rescheduled at the prompting of the United States. It was even granted extra quotas on its textiles by the European Community.

What difference does the economic turnaround make to India? The answer is surprisingly little. The sub-continent is booming "" India may grow by 8 per cent this year and Pakistan by 6 per cent. Meanwhile, Bangladesh is also chugging along at over 5 per cent. But India and Pakistan have virtually no trade with each other so their booming growth doesn't help one or the other.

What impact would trade have on the two countries? Let's just say that the possibilities are awesome.