[Friday Times] Standard and Poor, the top international credit rating agency, has just warned that Pakistain's ratings could slip down a notch (currently B- for long term credit worthiness and C for short term) if political instability and security risks continue to scare away investors, retard economic growth and forestall desperately needed structural adjustments and fiscal reforms. Particular note was taken of the country's "renewed balance of payment difficulties and a rising public debt trajectory" (144 per cent increase in the last four years of the Zardari regime, from Rs 4.8 trillion in FY 2007 to Rs 11.73 trillion in Dec 2011 or nearly 61 per cent of GDP). Who is responsible for this state of affairs?Obviously, much of the blame must go to the Zardari government. It has reeked of corruption and incompetence from Day One. And it has hugely mismanaged and neglected the economy.
In theory, at least, the recipe was clear enough from the outset: raise revenues by enlarging and deepening the tax base; rationalize and prune expenditures; privatize state corporations and stop doling out Rs 500 billion in subsidies every year to loss making or leaking public sector enterprises. In practice, however, a number of extraneous factors have served to dampen the government's enthusiasm for reform.