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Pakistan
Development Planning
Pakistan's economic development planning began in 1948. By 1950
a six-year plan had been drafted to guide government investment
in developing the infrastructure. But the initial effort was unsystematic,
partly because of inadequate staffing. More formal planning--incorporating
overall targets, assessing resource availability, and assigning
priorities--started in 1953 with the drafting of the First Five-Year
Plan (1955-60). In practice, this plan was not implemented, however,
mainly because political instability led to a neglect of economic
policy, but in 1958 the government renewed its commitment to planning
by establishing the Planning Commission.
The Second Five-Year Plan (1960-65) surpassed its major goals
when all sectors showed substantial growth. The plan encouraged
private entrepreneurs to participate in those activities in which
a great deal of profit could be made, while the government acted
in those sectors of the economy where private business was reluctant
to operate. This mix of private enterprise and social responsibility
was hailed as a model that other developing countries could follow.
Pakistan's success, however, partially depended on generous infusions
of foreign aid, particularly from the United States. After the
1965 Indo-Pakistani War over Kashmir, the level of foreign assistance
declined. More resources than had been intended also were diverted
to defense. As a result, the Third Five-Year Plan (1965-70), designed
along the lines of its immediate predecessor, produced only modest
growth.
When the government of Zulfiqar Ali Bhutto came to power in 1971,
planning was virtually bypassed. The Fourth Five-Year Plan (1970-75)
was abandoned as East Pakistan became independent Bangladesh.
Under Bhutto, only annual plans were prepared, and they were largely
ignored.
The Zia government accorded more importance to planning. The
Fifth Five-Year Plan (1978-83) was an attempt to stabilize the
economy and improve the standard of living of the poorest segment
of the population. Increased defense expenditures and a flood
of refugees to Pakistan after the Soviet invasion of Afghanistan
in December 1979, as well as the sharp increase in international
oil prices in 1979-80, drew resources away from planned investments
(see Pakistan Becomes a Frontline State , ch. 5). Nevertheless,
some of the plan's goals were attained. Many of the controls on
industry were liberalized or abolished, the balance of payments
deficit was kept under control, and Pakistan became self-sufficient
in all basic foodstuffs with the exception of edible oils. Yet
the plan failed to stimulate substantial private industrial investment
and to raise significantly the expenditure on rural infrastructure
development.
The Sixth Five-Year Plan (1983-88) represented a significant
shift toward the private sector. It was designed to tackle some
of the major problems of the economy: low investment and savings
ratios; low agricultural productivity; heavy reliance on imported
energy; and low spending on health and education. The economy
grew at the targeted average of 6.5 percent during the plan period
and would have exceeded the target if it had not been for severe
droughts in 1986 and 1987.
The Seventh Five-Year Plan (1988-93) provided for total public-sector
spending of Rs350 billion. Of this total, 38 percent was designated
for energy, 18 percent for transportation and communications,
9 percent for water, 8 percent for physical infrastructure and
housing, 7 percent for education, 5 percent for industry and minerals,
4 percent for health, and 11 percent for other sectors. The plan
gave much greater emphasis than before to private investment in
all sectors of the economy. Total planned private investment was
Rs292 billion, and the private-to- public ratio of investment
was expected to rise from 42:58 in FY 1988 to 48:52 in FY 1993.
It was also intended that public-sector corporations finance most
of their own investment programs through profits and borrowing.
In August 1991, the government established a working group on
private investment for the Eighth Five-Year Plan (1993-98). This
group, which included leading industrialists, presidents of chambers
of commerce, and senior civil servants, submitted its report in
late 1992. However, in early 1994, the eighth plan had not yet
been announced, mainly because the successive changes of government
in 1993 forced ministers to focus on short-term issues. Instead,
economic policy for FY 1994 was being guided by an annual plan.
Data as of April 1994
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