Possible Financial Bunglings by Musharraf Government

Where’s the money?
Benazir Bhutto's widower is accusing President Musharraf of siphoning off millions from aid intended to support war on terrorChristina Lamb, Islamabad
Times online, August 10, 2008

THE embattled president of Pakistan, Pervez Musharraf, has been dealt his latest and most serious blow with the accusation from the leader of the ruling party that he misappropriated hundreds of millions of dollars of American aid given for supporting the war on terror.

Asif Ali Zardari, who took over the Pakistan People’s party (PPP) after his wife Benazir Bhutto was assassinated in December last year, made the charge in an interview with The Sunday Times.

He also detailed for the first time Musharraf’s attempts to sabotage his government which, he says, forced him to take the drastic step of demanding his impeachment.

“Our grand old Musharraf has not been passing on all the $1 billion [£520m] a year that the Americans have been giving for the armed forces,” he claimed. “The army has been getting $250m-$300m reimbursement for what they do, but where’s the rest?

“They claim it’s been going in budget support but that’s not the answer. We’re talking about $700m a year missing. The rest has been taken by ‘Mush’ for some scheme or other and we’ve got to find it.”

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The economic chargesheet
By Dr Pervez Tahir, Dawn, August 12, 2008

THE constitutionality, legality and the morality of Musharraf’s impeachment is doubted by few. But many, and this includes some supporters of impeachment, seem to believe that he did turn the economy around. This is patently false.

An illusion of turnaround was created by imposing a wrong strategy of growth, sustained by a series of commando actions to enforce a culture of being economical with the truth. No wonder, when the inevitable meltdown occurred, it was simply unstoppable.

Take the criminal choice of growth strategy first. Any economist will tell you that growth in national income, the so-called GDP, can be achieved by promoting consumption, investment or net exports. The choice among these depends on the stage of development of a country. While net exports are good for both developed and developing countries, consumer spending dominates growth in the former and investment in the later. The reason is that developed countries have already accumulated a sizeable stock of capital while developing countries like Pakistan have not.

Growth under Musharraf has been driven by consumption. For example, GDP at market prices grew at six per cent in 2007-08. Consumption at 6.5 per cent, however, exceeded the GDP, the extra consumption coming from imports. Investment made a negligible contribution. Again, consumption-led growth has been contributed by the predominance of the services sector. In the past eight years, the average annual growth of services was 6.2 per cent, higher than the GDP growth of 5.6 per cent. The commodity-producing sector, important for livelihoods, grew far less at 4.9 per cent. The most pro-poor sector of agriculture posted the lowest growth of 2.8 per cent. The sector of the rich and the powerful — finance and insurance — achieved the highest growth at 14.4 per cent.

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