The economic managers of Pakistan tend to be fixated with growth rates. Strong performance on this front is presented to the publias progress on the development side. Here is where the country’s problem lies.Pakistan’s economy under Pervez Musharraf was hailed by most of the world for its impressive macroeconomic performance. The economic growth rate under his administration was one of the highest in Asia, the twin deficits were brought under control, and privatisation and foreign investment increased to record levels.The boom came and went.The year 2008 is being labelled as a year of economic crisis for Pakistan. But again, the benchmark is the macroeconomic performance. GDP growth is screeching downwards with FY09 projections ranging between 3.5 to 4.5 percent, significantly less than the planned target of 5.5 percent. Inflation, as measured by the Consumer Price Index, hit a record high of 25 percent. While the release of the IMF’s first tranche of $3.1 billion allowed the country to scrape its way out of defaulting on its external obligations, imbalances on the fiscal and current account still loom large.In reality, neither the boom nor the bust was wholly relevant to the question of development in the country. The problem lies with the benchmark; one has to look beyond the macroeconomic fireworks in both cases.Development for Pakistan must be understood in a broader perspective. The macro-economy is only one aspect, and from the perspective of the people, a less important one.The relationship between growth and poverty reduction is increasingly being contested. The Post-Washington Consensus now includes a component on social protection but is still largely fixated on macroeconomic stability. The problem, however, is that the central theoretical link between the macro-economy and the social aspect, the concept of ‘trickle down’, has proven to be exactly that — theoretical. There is increasing convergence on the fact that an automatic trickle down is highly unlikely in developing economies plagued with perverse redistribution outcomes.Governments in the world have shifted their attention to targeted expenditures as a way to make up for this gap. Direct and conditional cash transfer programmes are increasingly being utilised as a means to protect the poor and vulnerable in society. And despite the fact that Pakistani governments now categorically acknowledge the need for targeting, here is where the Musharraf government failed.Claims of the reduction in the poverty headcount ratio notwithstanding (according to World Bank estimates, poverty fell from a high of 33.3 percent in 2001-02 to 29 percent in 2004-05 — official figures claim much lower), the vast majority of the population was left to fend for itself and rely on informal social networks. The Gini Coefficient rose. Estimates of the incidence of vulnerability range between 47 to 67 percent.The Pakistan Safety Net Survey reveals that approximately two-thirds of households experienced one or more severe shocks during the three year prior to the Survey. Although most of the shocks were idiosyncratic, the country also experienced many aggregate shocks. Ultra-poor households experienced shock-related expenses amounting to 54 percent of their annual consumption as against 27 percent by poor households and 18 percent by non-poor households.In a country where the majority of population is clustered around the poverty line and extremely vulnerable to shocks, it is imperative that the government dedicate sufficient resources to properly develop and target safety net programmes. Existing public programmes to address poverty and vulnerability such as Zakat and Pakistan Bait-ul-Mal are both inadequate and entail woefully high leakages. Further, informal mechanisms are insufficient and are unable to address the needs of those who need it most in an appropriate time-frame, i.e. the vulnerable.Total expenditures on social assistance programmes (excluding social security/pension) amount to approximately 0.3 percent of GDP in Pakistan as against 2.5 percent in India, 1.3 percent in Sri Lanka, and 0.8 percent in Bangladesh. Transfers that do reach beneficiaries are only a fraction of this expenditure.Based on the measures taken in 2008, indications that the government intends to holistically reform its outlook towards development do not look promising. The State Bank of Pakistan claims that the government has made a ‘fine start’ in curbing the fiscal deficit. However, improvement has been made on the back of slashing oil subsidies and ‘cutting development spending’.Targeted expenditures saw much innovation but little tangible improvement in the previous year. The government now has put virtually all its eggs in the Benazir Income Support Programme basket. While a move in the right direction in that fresh targeted expenditures would be made available, the programme’s design already exhibits virtually all aspects which literature points to as obvious pitfalls that result in high leakages and low social impact.Insensitivity to the plight of the people has been also demonstrated in other, linked, ways. For instance, the sharp decline in international prices was not commensurately reflected in domestic prices. While the depreciation of the Rupee has offset some of the gains, no check was made by the government on the fact that transportation costs, for example, were not adjusted downwards.In the final outcome, the year 2008 has been no different than pervious years for Pakistan in terms of development. Indeed, the boom is over but that boom was never for development as an enterprise in its entirety to begin with. The social aspect of development remains critical — indeed most critical — if Pakistan is to make its development tenable. And there, we have only shifted our focus on paper. Until rhetoric about improved targeting efficiency and coordinated targeted programmes is transformed into reality, the macro-economy and development has a whole will remain disconnected to the detriment of the latter, and in effect, of the poor of Pakistan.The PPP government will be well advised to expand its social safety net agenda in volume and enhance it in qualitative terms. Barring this, 2009 is unlikely to be any different. The writer is a graduate student at Harvard University, and Director of the Strategic and Economic Policy Research in Islamabad