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GDP Growth Sources of Finance in Pakistan

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DOI: 10.1007/978-3-642-40078-0-52

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Chapter 52
GDP Growth Sources of Finance in Pakistan

Asif Kamran, Nadeem A. Syed, Khurram Amin and Syed Nayyer Ali

Abstract All the serious challenges Pakistan’s GDP is facing today like very wide
budget and trade deficits, galloping inflation, increase in the level of poverty, power
outages, water shortages, closure of industries, food insecurity, etc, has diverted our
attention from realizing the very serious challenge that we have overcome. Since
the 1950s we had a system in this country where the Ministry of Finance and all
the economic ministries were headed by World Bank and IMF officials of Pakistan
origin. People feel vindicated to see representatives of the people occupying min-
istries of finance and economic affairs. Monopolies and cartels have played a major
role in restricting output and escalating prices in Pakistan. Most of the members
of cartels are ministers and other influential. The Government has to devise both a
short term as well a long term policy to deal with the situation. In the short run the
Government should scrutinize the imports of the country and temporarily halt the
import of nonessential consumer goods, luxuries, etc. The research data has been
collected which consists of a survey of 42 respondents, among whom the question-
naires have been distributed. The data is presented in tabulated and graphical form.
Through this research a vast segment of respondents was analyzed, while dividing
them into several age groups. The questionnaire has enabled the researcher to re-

A. Kamran (B)
School of Management & Economics, University of Electronic Science & Technology of China,
Chengdu 610054, P. R. China
Management Science Department, National University (Fast), Karachi 009221, Pakistan
e-mail: asifkamrankhan@gmail.com
N. Syed
Management Science Department, Shaheed Zulfikhar Ali Bhutto Institute of Science and Technol-
ogy (SZABIST), Karachi 75600, Pakistan
K. Amin
Management Science Department, National University (Fast), Karachi 009221, Pakistan
S. Ali
General Studies Department, Yanbu Industrial College, Madinat 30426, Yanbu Al Sinaiyah, Saudi
Arabia

J. Xu et al. (eds.), Proceedings of the Seventh International Conference 603

on Management Science and Engineering Management (Volume 1),
Lecture Notes in Electrical Engineering 241, DOI: 10.1007/978-3-642-40078-0_52,
Ó Springer-Verlag Berlin Heidelberg 2014
604 A. Kamran & N. Syed & et al

main objective, detached, value-free and non-influential on the study. The results
have been analyzed through several tools to be able to give recommendations and
draw conclusions.
Keywords Gross domestic product (GDP) · Uncertain variable · Gross domestic
income (GDI) · System of national accounts (SNA)

52.1 Introduction to GDP

The gross domestic product (GDP) or gross domestic income (GDI) is one of the
measures of national income and output for a given country’s economy. GDP is
defined as the total market value of all final goods and services produced within the
country in a given period of time (usually a calendar year). It is also considered the
sum of a value added at every stage of production (the intermediate stages) of all
final goods and services produced within a country in a given period of time, and it
is given a money value.
The most common approach to measuring and understanding GDP is the expen-
diture method:

GDP = consumption + gross investment + government spending

+(exports − imports), (52.1)
GDP = C + I + G + (X − M). (52.2)

“Gross” means depreciation of capital stock is not subtracted. If net investment

(which is gross investment minus depreciation) is substituted for gross investment
in the equation above, then the formula for net domestic product is obtained. As per
Tandon Consumption and investment in this equation are expenditure on final goods
and services [2]. The exports-minus-imports part of the equation (often called net
exports) adjusts this by subtracting the part of this expenditure not produced domes-
tically (the imports), and adding back in domestic area (the exports).
Economists (since Keynes) have preferred to split the general consumption term
into two parts; private consumption, and public sector (or government) spending.
Two advantages of dividing total consumption this way in theoretical macroeco-
nomics are: Private consumption is a central concern of welfare economics. The
private investment and trade portions of the economy are ultimately directed (in
mainstream economic models) to increases in long-term private consumption.
As per Shahida and Wizarat [3], if separated from endogenous private consump-
tion, government consumption can be treated as exogenous, so that different gov-
ernment spending levels can be considered within a meaningful macroeconomic
framework [6].
52 GDP Growth Sources of Finance in Pakistan 605

52.1.1 Measuring GDP

The components of GDP: Each of the variables C, I, G and XM (where GDP=

C + I + G + (X − M) as above).
C is private consumption in the economy. This includes most personal expendi-
tures of households such as food, rent, and medical expenses and so on but does not
include new housing.
(Note: * GDP is sometimes also referred to as Y in reference to a GDP graph).
C is private consumption in the economy. This includes most personal expendi-
tures of households such as food, rent, and medical expenses and so on but does not
include new housing.
As per Wizarat and Shahida they defined as investments by business or house-
holds in capital. Examples of investment by a business include construction of a new
mine, purchase of software, or purchase of machinery and equipment for a factory
[5]. Spending by households (not government) on new houses is also included in In-
vestment. In contrast to its colloquial meaning, ‘Investment’ in GDP does not mean
purchases of financial products. Buying financial products is classed as ‘saving’, as
opposed to investment. The distinction is (in theory) clear: if money is converted
into goods or services, it is investment; but, if you buy a bond or a share of stock,
this transfer payment is excluded from the GDP sum. That is because the stocks
and bonds affect the financial capital which in turn affects the production and sales
which in turn affects the investments. So stocks and bonds indirectly affect the GDP.
Although such purchases would be called investments in normal speech, from the
total-economy point of view, this is simply swapping of deeds, and not part of real
production or the GDP formula.
G is the sum of government expenditures on final goods and services. It includes
salaries of public servants, purchase of weapons for the military, and any investment
expenditure by a government. It does not include any transfer payments, such as
social security or unemployment benefits.
X is gross exports. GDP captures the amount a country produces, including goods
and services produced for other nations’ consumption, therefore exports are added.
M is gross imports. Imports are subtracted since imported goods will be included
in the terms G, I, or C, and must be deducted to avoid counting foreign supply as
domestic.
Examples of GDP component variables
Examples of C, I, G, and NX: If you spend money to renovate your hotel so
that occupancy rates increase, that is private investment, but if you buy shares in a
consortium to do the same thing it is saving. The former is included when measur-
ing GDP (in I), the latter is not. However, when the consortium conducted its own
expenditure on renovation, that expenditure would be included in GDP.
For example, if a hotel is a private home then renovation spending would be
measured as Consumption, but if a government agency is converting the hotel into
an office for civil servants the renovation spending would be measured as part of
public sector spending (G).
606 A. Kamran & N. Syed & et al

If the renovation involves the purchase of a chandelier from abroad, that spending
would also be counted as an increase in imports, so that NX would fall and the total
GDP is affected by the purchase. (This highlights the fact that GDP is intended to
measure domestic production rather than total consumption or spending. Spending
is really a convenient means of estimating production.)
If a domestic producer is paid to make the chandelier for a foreign hotel, the
situation would be reversed, and the payment would be counted in NX (positively,
as and export). Again, GDP is attempting to measure production through the means
of expenditure; if the chandelier produced had been bought domestically it would
have been included in the GDP figures (in C or I) when purchased by a consumer
or a business, but because it was exported it is necessary to ‘correct’ the amount
consumed domestically to give the amount produced domestically.

52.1.2 Types of GDP and GDP Growth

World map showing GDP real growth rates for 2007. Current GDP is GDP ex-
pressed in the current prices of the period being measured
Nominal GDP growth is GDP growth in nominal prices (unadjusted for price
changes).
Real GDP growth is GDP growth adjusted for price changes.
Calculating the real GDP growth allows economists to determine if production
increased or decreased, regardless of changes in the purchasing power of the cur-
rency.

52.1.3 Measurement

(1) International standards

As per Burney, the international standard for measuring GDP is contained in the
book System of National Accounts (1993), which was prepared by representatives
of the International Monetary Fund, European Union, Organization for Economic
Co-operation and Development, United Nations and World Bank [4]. The publica-
tion is normally referred to as SNA93 to distinguish it from the previous edition
published in 1968 (called SNA68). SNA93 provides a set of rules and procedures
for the measurement of national accounts. The standards are designed to be flexible,
to allow for differences in local statistical needs and conditions.
(2) National measurement
Within each country GDP is normally measured by a national government sta-
tistical agency, as private sector organizations normally do not have access to the
information required (especially information on expenditure and production by gov-
ernments).
(3) Interest rates
52 GDP Growth Sources of Finance in Pakistan 607

As per Richard, net interest expense is a transfer payment in all sectors except the
financial sector. Net interest expenses in the financial sector are seen as production
and value added and is added to GDP [10].

52.1.4 GDP Is “The Economy”

As per Wizarat and Shahida, When people refer to “the economy” they are gener-
ally referring to GDP. If a newsperson says, “The economy grew by 3.5 percent last
year”, it means that GDP grew by 3.5 percent during the year (compared with the
previous year’s GDP). Incidentally, a growing economy characterizes an expansion,
which is also known as a recovery [5]. A contracting economy characterizes a re-
cession. For now, it’s important to know that a society benefits greatly from a stable,
growing economy.
A growing economy generates increasing amounts of jobs, incomes, and goods
and services for its citizens. All of these are good things, of course. In a contracting
economy, jobs and incomes are lost and the amount of goods and services produced
shrinks. This puts people out of work, and means that there are fewer goods and ser-
vices to go around. A stagnant economy-one that is neither growing nor contracting-
isn’t much better than one that’s contracting. As the population grows, people need
more jobs and more goods and services, and a stagnant economy doesn’t produce
them.
If you look at the formula for GDP, you’ll see that if any one component in-
creases, then the total GDP increases (assuming that the other components remain
unchanged). For example:
• If consumer spending grows-if people buy more clothing and cars and homes-
then the economy grows.
• If business investment grows-if companies invest in new buildings and equipment
and buy more raw materials-then the economy grows.
• If government spending grows-if money is poured into the space program, de-
fense, roads, and police forces-then the economy grows.
By the same token, if any one component of GDP decreases, then total GDP
decreases unless another component of the GDP increases enough to make up for
the loss.

52.1.5 Effect of a Real GDP Increase (i.e., Economic Growth) on

Interest Rates

Lastly consider the effects of an increase in real GDP. Such an increase represents
economic growth. Thus, the study of the effects of a real GDP increase is the same
as asking how economic growth will affect interest rates.
608 A. Kamran & N. Syed & et al

GDP may increase for a variety of reasons and are discussed in subsequent chap-
ters. For now we will imagine that GDP increases for some unspecified reason and
consider the consequences of such a change in the money market.
Suppose the money market is originally in equilibrium at point A in the adjoining
diagram with real money supply M S /P$ and interest rate $’. Suppose real GDP
(Y$ ) increases ceteris paribus. Again, the ceteris paribus assumption means that we
assume all other exogenous variables in the model remain fixed at their original
levels. In this exercise it means that the money supply (M S ) and the price level (P$ )
remain fixed. An increase in GDP will raise the demand for money because people
will need more money to make the transactions necessary to purchase the new GDP.
In other words, real money demand rises due to the transactions demand effect. This
increase is reflected in the rightward shift of the real money demand function from
L(i$ , Y$ ) to L(i$ , Y$ ) (see Fig. 52.1).

Fig. 52.1 Real money

At the original interest rate, $’, real money demand has increased to 2 along the
horizontal axis while real money supply remains at 1. This means that real money
demand exceeds real money supply and the current interest rate is lower than the
equilibrium rate. Adjustment to the higher interest rate will follow the “interest rate
too low” equilibrium story.
The final equilibrium will occur at point B on the diagram. As the interest rate
rises from $’ to $”, real money demand will have fallen from 2 to 1. Thus, an in-
crease in real GDP (i.e., economic growth) will cause an increase in average interest
rates in an economy. In contrast, a decrease in real GDP (a recession) will cause a
decrease in average interest rates in an economy.

52.1.6 Pakistan’s GDP Growth

Pakistan is a nation with a diverse economy that includes textiles, chemicals, food
processing, agriculture and other industries. It is the 25th largest economy in the
world. The economy has suffered in the past from decades of internal political dis-
putes, a fast growing population, mixed levels of foreign investment, and a costly,
ongoing confrontation with neighboring India. However, IMF-approved government
52 GDP Growth Sources of Finance in Pakistan 609

policies, bolstered by foreign investment and renewed access to global markets,

have generated solid macroeconomic recovery the last decade. Substantial macroe-
conomic reforms since 2000, most notably at privatizing the banking sector have
helped the economy. Pakistan has seen a growing middle class population since
then and poverty levels have decreased by 10% since 2001. GDP growth, spurred
by gains in the industrial and service sectors, remained in the 6-8% range in 2004-
06. In 2005, the World Bank named Pakistan the top reformer in its region and in
the top 10 reformers globally (see Table 52.1).

Table 52.1 GDP — real growth rate: 6.3% (2007 EST)

Year GDP — real growth rate Rank Percent change Date of information
2003 4.50% 48 FY01/02 est.
2004 5.50% 45 22.22% 2003 est.
2005 6.10% 47 10.91% 2004 est.
2006 6.60% 48 8.20% 2005 est.
2007 6.60% 59 0.00% 2006 est.
2008 6.30% 62 −4.55% 2007 est.

52.1.7 Statement of Problem

GDP is a significant factor in identifying the growth of a country; there are many
efforts by the government to increase the growth rate of the economy thus increasing
the GDP. Pakistan as a growing nation has shown potential in the latter years with a
sufficient growth in GPD but unfortunately it has now decreased below expectations,
thus my topic “Sources of financing in the growth of GDP”.
The research looks in to the related matters and analyzes the following:
• economy overview,
• efforts by the government,
• international funding,
• indicators and their effect on GDP,
• future prospective.

52.2 Significance of the Study

This effort is basically a research report and it is being conducted to find the po-
tentiality of sources such as production, taxation extra to help increase the GDP of
Pakistan. This research will provide an outline to Economists, Finance students and
the relative concerns. This project that is basically an effort to,
610 A. Kamran & N. Syed & et al

• The understand sector in brief,

• The identify prospects of growth,
• Provide financial estimates.

52.2.1 Scope of the Study & Delimitation

Due to political instability, the policies of Pakistan keep changing as the government
changes and because of it might be affecting on the economy.
Most importantly, another thing that needs to be considered here is conducting
such study is my first experience and I have no earlier experience regarding such
survey.
In light of these reasons, the report may not be valid for a long period of time. So
the time frame of this report is kept up to one year.

52.2.2 Basic Assumption

The research is conducted through utmost effort to find the possible financial sources
that will contribute towards the growth of the economy and in turns the GDP. As the
mode of investment, government policies and the international economic environ-
ments constantly and highly changing, So there are some assumptions that are kept
in order to project a better picture of the business.
Some of them are:
• The current market trend continue in the market.
• The government will remain the same.
• The government will not change its basic laws concerning the mega projects and
the working of different areas such construction of roads, bridges and parks.
• The investment pattern will remain in the favor this sector.
• Government would not change any of its regulatory laws.
In the light of the above basic assumptions the study will be carried out and the
change of any of the above assumptions might influence the study and will reduce
the level of accuracy of the study.

52.3 Research Design & Methods

The research is designed to check the financial sources affecting the growth of the
economy. It is also to cover all the important aspects related to the matter. Further-
more, further data will be gathered from various sources in order to achieve the
objective.
52 GDP Growth Sources of Finance in Pakistan 611

While designing this research study it was considered that it should serve the
purpose of practical applicability and should be in line with the objective of the
study. The data will be gathered through secondary data as well as primary data.
Secondary data will be gathered from the internet or different published articles
from concerned magazines. Arranging unstructured interviews with the concerned
people and hearing their views about the opportunity will be the method used for
gathering of primary data. The type of study is explorative since the study will cover
the potentiality of the sources in the current era.

52.3.1 Respondents of the Study

Respondents of the study are:

• Economists,
• Financial advisors,
• Concerned teachers.

52.3.2 Research Instrument

The main instrument used in this research is unstructured interviews through which
a wide variety of information can be retrieved from the respondents. Primary data is
gathered in the form of interviews & questionnaires. Interviews will be conducted by
personally meeting the concerned people and asking them about the related issues
and concerns of the objective being studied. Interviews will be preferred but due
to the shortage of time and availability of the respondents’ questionnaire will be
provided. Secondary Data Sources include research reports of previous researchers,
newspapers, magazines, and Internet.

52.3.3 Treatment of Data

The data collected through primary research will be calculated on the qualitative
basis as well as on numerical basis that is quantitative basis. The relevant statistical
data that will be converted into the form of charts and the interpretations of that
secondary data will be done.
612 A. Kamran & N. Syed & et al

52.3.4 Presentation Analysis

The data gathered will be analyzed on qualitative as well as on quantitative basis and
the presentation of the findings will be in the form of charts, tables and explanations.
(1) Structural issues
As per ABN-AMRO Bank report [1] stated that the ultimate causes of poor ex-
ports are grounded in long-term and deep structural issues relating to the lack of
diversification of export industries, poor compliance with quality standards, and
concentration of exports in a small number of markets, it added.
Tarin conceded that the industrial base in Pakistan is “very low, highly lopsided
and mostly dependent on textiles”. The industrial base is low because of basic struc-
tural weaknesses developed over the years. It has not developed like other develop-
ing countries. The manufacturing sector contributes 25 to 35 per cent to the GDP
in developing countries but we have not developed like others. We are now making
efforts to follow that route and broad-base our industrial sector, said the minister.
(2) Performance
Excessive protectionism in the past has been the root cause for a lackluster
performance of the industrial sector in general. “My biggest concern is that we
had strength in textiles, but we are in danger of losing our edge because of over-
protection to the textile industry and if we do not prepare for the international mar-
keting competition.” ABN-AMRO Bank [1] report said the share of manufacturing
in GDP was 12 per cent when General Musharraf took over and has increased to 19
per cent in 2006-07. He said the industrial sector has played a key role in developing
countries but this area has not developed in Pakistan like other developing countries.
The manufacturing sector contributes 25 to 35 per cent to the GDP in developing
countries but we have not developed like others. “We are now making efforts to
follow that route and broad-base our industrial sector.”
To change this structural base is a long-term job and basic challenges we are
going to face are lack of skills, modernization of technology and provision of raw
material. So, we are now focusing on skill development, including managerial skills
and labor skills, particularly in the engineering sector. Tarin said our engineering
sector, particularly iron and steel, has been hostage to protectionism. The Pakistan
Steel Mills that should have been a source of strength for iron and steel has, in fact,
been hampering growth. So we have reduced import duties to make raw material
available at lower costs.
(3) Initiatives
Secondly, Pakistan has been lacking marketing initiatives. Hence, the Engineer-
ing Development Board is being revitalized while efforts are being made to urbanize
the SME sector. The minister did not agree that utility costs were extremely high in
Pakistan. “That is a myth.” He said the textile ministry has recently got a study done
by an international firm WERNER’s which after comparing a number of countries
has come up with the conclusion that utility costs are not high. However, efficient
use is the key and this is an area where we could improve things by developing
managerial and labor skills and technology up gradation.
52 GDP Growth Sources of Finance in Pakistan 613

52.4 Analysis of the Questionnaire

(1) How can you define GDP?

GDP stand for Growth Domestic Product and is one of the measures of a coun-
try’s income and output from a country’s economy, it’s a total value of all the final
goods and services produced in a particular economy (Statistical supplement (2008-
09)) [7]. Firstly it is equal to the total expenditures for all the final goods and services
produced within a country now secondly it is equal to the sum of the value added of
every stage of production by all the industries within the country third it is equal to
the sum of income generated by production in the country.
(2) GDP is widely used by economists to gauge the health of an Economy; do you
think it is a correct measure?
I have included this question in order to understand the preferences of the
economist in the measure of the country’s total production

Fig. 52.2 Whether GDP is

No
widely used by economists
20%
to gauge the health of an
Economy

Yes
80%

Through research I found that most of the economist measure GDP as a correct
measure for calculating country’s income, 20% replied NO and 80% says yes (see
Fig. 52.2).
(3) In your opinion Pakistan’s G
I have included this question in order to understand the current knowledge of the
respondents about the economic condition of Pakistan.

Fig. 52.3 Current knowledge

Increasing Stagnant
of the respondents about 14%
12%
the economic condition of
Pakistan
Decline
74%

I found out that the people were very current with the economic conditions 12%
people says increasing GDP, 14% people says Stagnant and 74% people says GDP
Decline (see Fig. 52.3), as the new that Pakistan’s economy was in a declining state
majorly due to the economic condition of the world.
(4) What steps the government has taken?
Through research I found out that major’s reason for this economic decline was
due to the world’s economic crisis and due to the rich Pakistan’s saw major flight of
614 A. Kamran & N. Syed & et al

capital and liquidity crunch.

(5) What is your opinion on the steps taken by the government?
I have included this question in order to find out what the respondents thought
about the recent activities of the government to establish the economic conditions
of Pakistan.

Fig. 52.4 The respondents

thought about the recent Strongly
activities of the government Agree
Disagree
to establish the economic 35%
48%
conditions of Pakistan
Agree
17%

Through the research I found out the 70% of people Disagreed 25% agreed and
5% strongly agreed.
Through the research I found out the 48% of people Disagreed 17% agreed and
35% strongly agreed (see Fig. 52.4).
(6) In the light of above discussion do you think GDP is a not good predictor of a
countries growth?
I included this question to find out that now after acquiring knowledge about
GDP and it’s current reputation as the measurer of the country’s growth so from
perspective of the respondent that is it a correct measure or not.

Fig. 52.5 Whether GDP is

not a good predictor of a 0.15
countries growth
Yes
No

0.85

In this question we found that 15% people says Yes and 85% people says No (see
Fig. 52.5).
(7) In your opinion what factors affect GDP the most?
Through research I found out that the main factor that effected GDP was the
current interest rates of the country which directly affected the investments of the
country thus affecting the growth.
Secondly I found out that the net export was very low as compare to the net
imports which indicated huge flight of capital thus indicating decrease in foreign
reserve of the country.
(8) What steps the government has taken to ensure the stability of this particular
factor?
Government has taken help from IMF in terms of loan secondly has introduced a
strict monetary policy which insures the stability of the interest rate also restrictions
52 GDP Growth Sources of Finance in Pakistan 615

on the import of foreign goods.

(9) What is your thought on the government efforts?
I have included this question to find the perception of the respondents about the
efforts of the government for the stability of the economy and interns of the growth
of the GDP.

Fig. 52.6 Thought on the

government efforts
0.5 Disagree

0.75 Agree
StonglyAgree
0.2

I have concluded that the steps taken by the government are not satisfactory (see
Fig. 52.6).
(10) What else could be done?
I have included this question to know about further steps to be taken and con-
cluded that the government should encourages the exporters by ensuring and re-
stricting illegal trade and government should also ensure the cut down of interest
rate as it would directly affect the growth of the industries of the country which will
also affect the inflation of the country.
(11) What other factors can you identify?
Through research I found out that other factors include the consumption factors
and expenditure factors, consumption in the sense that as the country’s income will
grow and consumption will also increase thus increasing the GDP. Secondly if we
talk about expenditures we will say that if government increases its expenditures
and that will end up affecting the GDP.
(12) How the recent recession has affected the country’s GDP?
Through research I found out that the recent recession has increased the unem-
ployment rate through which masses have lost their purchasing power. Secondly the
interest rate has grown up due to which it has affected the inflation rate.
(13) Due to recession has the factor lost its importance?
I have included this question to know about the perception of the respondents
about the factors that have lost the importance which were discussed before.

Fig. 52.7 The perception of

the respondents about the 0.22
factors that have lost the Yes
importance
No

0.78
616 A. Kamran & N. Syed & et al

Through research I found out that since as these factors were very important in
increasing the growth rate of the economy and government was really influenced in
the increasing of these factors but due to the world economic crisis and the current
crunch in the Pakistani economy, these factors were not able to fully play their
role in the economic conditions of the country also because of which governments
effort has also not been worthwhile but still government is trying to make the most
situation and get back the economy on line (see Fig. 52.7).

52.5 Conclusions

All the serious challenges Pakistan’s GDP is facing today like very wide budget
and trade deficits, galloping inflation, increase in the level of poverty, power out-
ages, water shortages, closure of industries, food insecurity, etc, has diverted our
attention from realizing the very serious challenge that we have overcome. Since
the 1950s we had a system in this country where the Ministry of Finance and all
the economic ministries were headed by World Bank and IMF officials of Pakistan
origin. With increase in the indebtedness of the country the situation got from bad to
worse. The worst period was the decade of the 1990s when not only the economic
ministries, but even prime ministers came from these institutions. During negotia-
tions between the Government of Pakistan (GOP) and the International Financial
Institutions (IFIs) it was difficult to distinguish between the GOP and the IFIs, for
both sides comprised of IFI officials. These were very trying times for those of us
who value independence and economic sovereignty of the country. As per Wizarat
and Shahida, there are several articles questioning the wisdom of a system which
even after elections denied the representatives of the people to have anything to do
with the ministries that dealt with the wealth and finances of the people [9]. So
people feel vindicated to see representatives of the people occupying ministries of
finance and economic affairs.
Starting with this positive note let us now try to give some suggestions to the new
government on crisis management of the economy and thus the GDP. But before we
venture into discussing specific problems and challenges let me present two broad
observations. It is quite acceptable for a country to deviate from its normal course
during times of emergency and ultimately come back to the designated path. For ex-
ample, the United States of America states that it is committed to liberalization and
globalization. Yet, in the aftermath of a crisis it imposed a 30% tariff on the import
of steel. Therefore, crisis management warrants we deviate temporarily from liber-
alization to fix the distortion, and return to the path when things return to normal.
Second, in order to retain our economic sovereignty it will be better not to resort to
policy based lending.
 52 GDP Growth Sources of Finance in Pakistan 617

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nent Persons Group (EPG) Seminar and Proceedings and Later in the Business Recorder, 31
December
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