Structural adjustment flops.

Structural adjustment programmes by the IMF have been characterised, in the neoliberal era, by two overarching goals: a) macroeconomic stabilisation via a reduction in the fiscal deficit, mitigation of the rate of inflation, and improvement in the current account; and b) privatisation/ denationalisation. The first of these was formalised in Pakistan during the transitionary period between Zia ul Haq's military regime and the incoming civilian government led by Benazir Bhutto - triggering a recurring cycle of programmes that were agreed to by political leadership over the subsequent decades. How successful were they?

In the years prior to the first SAP, the average annual fiscal deficit as a percentage of GDP was 7.17% - a figure that rose to 9.5% of GDP in the years 1992-93. As per the World Bank, this was perfectly normal and to be expected due to the 'transitional costs that were accepted before economic growth and efficiency would generate broader economic improvements'. What is usually left out of discussions, however, is that the IMF's own stated objective of the 1988 SAP was to bring down the deficit to 4.8% of GDP by 1990-91. Furthermore, government subsidies, rather than declining - as promised by proponents of SAPs - actually rose significantly, going from a total of Rs12.5 billion in 1990 to Rs150 billion in 2009. This naturally raises concerns about the newly privatised enterprises - which seem to have remained dependent on government support in order to survive.

Tax revenues, on the other hand, far from improving, largely declined - going from an annual average collection of 11.1% of GDP in the 1990s to 9.3% in the 2000s. Personal income tax rates fell from an average of 30% in 2006 to 20% in 2009, and corporate tax rates shrank from an average of 53% in 1992 to 35% in 2009. Indirect tax rates, however, rose from an average of 15% to 17% in the same period. All these data points indicate that whenever the fiscal deficit might have improved, which it rarely did, it predominantly came at the expense of ordinary citizens who faced higher general sales taxes and a contraction of public investment in development and crucial social sectors. Healthcare expenditure, for instance, went from 1% of GDP in 1987 to 0.7% in 1997 and 0.23% in 2010.

Pakistan's exports in 1990 stood at $6.1 billion - a figure that climbed to $7.8 billion by the end of the decade, with an annual average growth rate of about 5.66%. While this may sound promising...