The Nawaz Sharif Government has instituted far reaching changes in the Foreign Currency Regulations in a bid to make the domestic climate more conducive to foreign investment. This marks one of the most fundamental of the reforms needed to revitalize the economy and one must commend the courage of the present regime, especially the PM and the Finance Minister. All these changes were on the anvil during the previous PPP Government but unfortunately Ms Benazir mixed up her priorities, economic options were waylaid by personal greed of some of her partymen and close relatives. Rumours abound that Senator Dr Mahbubul Haq was about to attempt such a departure from the norm when he was Finance Minister, the credit must rightly go to the mature, confident and unassuming Sartaj Aziz for ushering in these changes. Honesty in day-to-day dealing and a feet-on-the-ground approach accomplishes much more than flamboyant rhetoric dedicated to self-propagation. Dr Mahbubul Haq’s cerebral qualities are overshadowed by his known penchant to somersault on key ideological issues under pressure. To that extent and more, Sartaj Aziz dominates him, simply by his quiet demeanour, steadfastness and firm authority.
In the face of one of the most far reaching economic decisions of the last two decades, that of allowing commercial banks in the private sector, the Nawaz Sharif Government has simultaneously decided to go whole hog for disinvesting the Nationalised Commercial Banks (NCBs), using Muslim Commercial Bank (MCB) as the guinea pig. Leaders of Third World countries are known to usually try and search for windmills off the beaten track to tilt against, another sorry example of negating an excellent decision by a bad one. The NCBs must compete in a free financial market atmosphere and if they fail to stand the heat, to die a natural death by themselves. Given that Mr. Sartaj Aziz has stated that a comprehensive economic reform package revolutionizing Pakistan’s economy would be announced in 6-8 weeks, this unholy, unseemly rush to offload a commercially viable NCB from public sector aegis becomes more mystifying, to say the least.
Among the designated HIT LIST of the Disinvestment Committee for Privatisation are the Trading Corporation of Pakistan (TCP), the Rice Export Corporation of Pakistan (RECP) and the Cotton Export Corporation of Pakistan (CECP). The performance of TCP, except for a brief period under Mr Yousuf as Chairman during 1983-85, has been more or less atrocious, more due to mala fide intervention (or benign negligence) of the Ministry of Commerce (MoC) as opposed to its own shortcomings. RECP and CECP could have performed much better, in the final analysis they have more than served the national purpose. The efficacy of top management and national requirement may have varied directly proportional to the quality of bureaucrats posted in but Pakistan has had a world position for the last two decades in rice and cotton because of the monopoly situation created by RECP and CECP.
The Nawaz Sharif government has made some very laudatory and swift moves towards freeing the economy, speeding up the process started by Junejo in 1985 and continued by Ms Benazir. Open-ended incentives for locating projects in the rural areas can only encourage rapid industrialisation. Demographically speaking, it will initiate population shift back to the rural areas. Bureaucracy’s control over the granting of permissions having been reduced in the “sanctioning of” part, the Empire will strike back (to reassert their authority), probably by making utilities unavailable. The politicians ability to cope with the bureaucracy’s capacity to filibuster will be the acid test of the economic will of the new Administration, a hard rock on which the PPP wave floundered.
History records the after effects of takeover of the assets of the British East India Company by the British Government in the name of the Crown subsequent to the 1857 War of Independence as a sordid example of the excesses of private enterprise being replaced by the inadequacies of bureaucracy’s lack of enterprise. Economics aside, it took almost a century for the foundations of the British Indian Empire to crumble, the residual of Imperial rule still afflicts South Asia, most particularly in ethnic and religious tension that sweeps the region. Our bureaucracy, no match for its British antecedents, particularly in honesty and sincerity of purpose, adds to its Atlas-like Administrative burden by ham-handed attempts to guide the economy of the nation, concentrating everything in the public sector, at the cost of private enterprise. Under the garb of a misguided sense of socialism that became the fashion of politics of the world in an era of slogan-mongering politicking in the 50s and 60s, more particularly the new emerging nations of the Third World, the State became a major (and dominating) participant in industry and commerce in Pakistan rather than acting to simply regulate the process in a laid-back manner, a sure recipe for disaster manifest in the despondency and hunger afflicting the masses of one of the Superpowers of today, the Soviet Union and its former proteges and client-nations of Eastern Europe. People who talk about the Marxist-Leninist type of socialism should be made to stand in queue in the bread lines of the USSR and the former COMECON countries.
Nawaz Sharif has been elected PM at a particularly difficult economic period, aggravated and complicated by the Gulf Crisis. The journey to becoming the executive head of the government may have been a political obstacle course, incumbent PM has now to apply his entrepreneurial background and experience in taking Pakistan out of its present economic doldrums.
To deal with the situation in Karachi, the PML(N) threw out its own Chief Minister to impose Governor’s Rule. With disorder rapidly descending into anarchy, the Army was brought in “aid of civil power” under Article 245 of the Constitution, Military Trial Courts (MTCs) being set up to deal with cases that qualified as falling under the head of “terrorism”. Military Appellate Courts were set up as a last resort of appeal, two persons whose appeals had been rejected have been hanged. In the meantime the Supreme Court, having been approached to define the legality of a “parallel” judicial system in the country, has suspended the further carrying out of the extreme punishment of death imposed by the MTCs till the case is pending in court is decided one way or the other. With the MTCs “teeth” clamped for the moment, their deterrent effect has been put in suspended animation.
A populist Government is always torn between two widely dissimilar choices, whether to go the popular route in avoiding the levying of taxes or to impose such taxation as may be necessary to offset necessary development. Ms Benazir’s Government chose the politically pragmatic route of avoiding taxes in fiscal 1989-90 and almost got away with it, one dare says that all conditions remaining equal, the Federal Government would not have had to resort to increasing fuel prices in the last quarter of the Budget year. The gamble did not come off, a combination of bad financial discipline, worsening world-wide economic situation, internal circumstances particularly strife affecting the port city of Karachi and the increasing threat perception from India because of the escalating situation inside Indian Held Kashmir (IHK) have combined to put all plans into an economic flat spin. The Government, therefore, resorted to a last gap fuel-hike but luckily for them the month of Ramzan timing coupled with the present apathy of the masses towards widespread protest, force multiplied by mass concern at the immediate Indian threat, has paid off.
Anyone darkening the doorstep of a financial institution nowadays looking for credit is usually informed that the “ceiling” has “burst” meaning that the bank’s lending limit has been exceeded. In the case of foreign banks who have limited credit ceilings and blue-chip corporate clients, this is an understandable reply, the response of the nationalised banks becomes intelligible only when you begin to understand the deep-rooted nepotism and cronyism practiced in the higher echelons of these financial institutions.
The growing polarisation between the populations of the major urban centres in Sindh compounded by the deteriorating law and order situation calls for drastic changes in conceptual planning for economic emancipation. This is the PM’s main electoral base, escalation in the level of violence will not be conducive to either economic progress or democratic rule. She has to take firm steps to contain the law and order situation from becoming worse, the government must look at economic means for long-term solutions for the Province as a whole.