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Archive for July, 1993

The Countdown Begins

The Caretaker PM, Mr. Moeenuddin Qureshi, has given as his first priority the conduct of free and fair elections. With 70 days to go the polls for the National Assembly, the Countdown may have started but electioneering has not yet commenced in earnest. Despite that we are much further advanced today in the pre-election process than we were on May 26 when the Supreme Court scuttled the July 14 date set by Ghulam Ishaq Khan and Co, which only goes to show that there is much more confidence about the elections of October 6 being held in comparison to the July 14 date. One must also state that the present Caretaker arrangement inspires confidence about their neutrality as opposed to the Supreme Court-terminated Balakh Sher arrangement which was clearly partial.

While elections are certainly a priority, the first priority remains the economy. Because of the prolonged state of limbo, Pakistan’s economy has been under severe pressure. The uncertainty has added to nervousness among potential investors thereby knocking down the sequence of events that was to lead us towards economic amelioration. Inflow of investment is the main prop for bolstering the economy during the state of transition. To cater for the shortfall, PM Moeen Qureshi will certainly ask his friends in the World Bank and IMF for international aid to start flowing immediately. One feels that he would do better by asking for a Debt Moratorium/Debt rescheduling for a three-year period. The policy of liberalisation has meant the removal of bureaucratic controls in order to attract investors to a free economy. Unfortunately investors have stayed away due to the political instability but the free economy environment and its lack of checks and curbs has created an adverse economic imbalance to the detriment of Pakistan. Our foreign exchange reserves have dwindled alarmingly. Massive devaluation by India had already effectively undercut our major export earners, cotton textiles, the hiatus in early reaction has contributed to taking us to the verge of economic apocalypse.

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The Continuity Factor

Mr Moeenuddin Qureshi, formerly Senior Vice President in the World Bank, effectively No. 2 of this international finance institution, has been appointed Caretaker PM of Pakistan for the period covering the elections and the installation of the elected Federal Government after the polls. In his first informal chat with reporters and journalists, he has emphatically emphasized free and fair elections as his first priority, adding that the polls should not only be free and fair they should be perceived by the general public as such.

While it is true that Moeen Qureshi is not exactly a household word in Pakistan, in Pakistani economic circles he is revered and respected as one of Pakistan’s finest economists, a man who had reached the pinnacle of international recognition on sheer dint of merit. After more than a decade (since 1980) as the No. 2 man in the World Bank, Mr Qureshi took voluntary optional retirement as only a US citizen could be President of the World Bank according to the Bretton Woods agreement. Having reached his level he wanted to devote his time to private pursuits as an international consultant. With established credentials as a non-political person acceptable to all parties but having international recognition, Moeen Qureshi’s selection was brilliant because it fulfilled both political and economic purposes. In this interim period where it is extremely important to re-open the in-flow Consortium Aid, there would be no better individual qualified to address this issue with his former colleagues in the international finance institutions. He has obvious credibility as a respected finance person in the capitals of the World, both among developed and developing countries. Lastly and most important, as a committed free market exponent he brings an economic continuity factor to Nawaz Sharif’s policies so that Pakistan does not stay in economic limbo. The people of Pakistan will decide in early October whether they want to support Nawaz Sharif or give a different mandate to his opponents. As such while Moeen Quereshi has ostensibly been brought in for political purposes as a neutral person having international experience, he has the added advantage of being a major force-multiplier on the economic front.

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Emphasis on Self-Reliance

After monitoring consecutive trade policies over the years one comes to the conclusion that every year brings an improvement over the previous annual period but sometimes the targets set are too ambitious. This year a more pragmatic course is followed, realistic goals have been set. The Trade Policy for 1993-94 sets an export target of US$ 8 billion against an estimated import bill of US$ 10 billion, leaving a gap of US $ 2 billion to be made over from other resources, mostly repatriated foreign exchange through workers’ remittances.

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The Summer of our Discontent

Two decades ago the unadulterated ambition of our then leaders overwhelmed the integrity of the most beautiful experiment in nationhood of its time, we have not seemed to learn anything from that sorry episode. We are now in the midst of the most serious political crisis since 1971. The rapidly degenerating state of our economy seems to get only cursory attention while our leaders pursue their own selfish agendas. The Army may yet get over its “reluctant suitor” status before the country goes down the drain (and there is nothing left to defend). After all there is a difference between restraint and inaction. Martial Law is not a solution but the influence that the Army can bring to bear on the politicians should not be held in abeyance till Doomsday. Quick solutions to the political maelstrom will not cause the rapid rejuvenation of our economic situation, this will be a long and painful process adversely affecting the common man placed downstream at the fag end of the economy. Since only a small percentage of our population is privileged to be uncommon, a vast majority are bound to face acute hardship.

In a state of transition, the economy is very vulnerable to external factors. While privatisation was initiated by Ms Benazir Bhutto’s PPP regime, it commenced in earnest due to the dynamism and drive of businessman PM Nawaz Sharif. Along with Deregulation, Disinvestment and Denationalisation, the Nawaz Sharif regime carried out a series of far-reaching liberalising reforms, removing straitjackets from the economy and raising the confidence of the business community. Acclaimed as a genuine politician only post-April 17, 1993, Nawaz Sharif has been impatient to rid the economy of artificially imposed shackles, removing it from the clutches of a bureaucracy corrupted to its very core. In order to kickstart the economy and an ingrained political inclination to achieve economic results within his tenure, he embarked on a series of extremely visible public sector projects in the field of communications, mainly motorways and telecommunications. Like Stephen Leacock’s hero, he seems to have jumped on his horse and galloped off in all directions, the PM should have paid more attention to prioritization. Funds have been hard to come by and credits have only added to the burgeoning national debt, debt servicing already reaching 35.5% of the available annual government revenues. The PM’s enthusiasm may be genuine and not wholly misplaced but financial managers normally tend to be conservative rather than dynamic, cautious rather than creative, they have been caught unawares and thus unready to cope with the demands for more and more funds. The Nawaz Sharif regime thus suffers from the public perception of haste and waste at the very core of its leadership. What was the use of taking back the VIP aircraft from PIA? Whenever it was required PIA could have made it available. This perception is most unfortunate as besides becoming the focus of public censuring, it calls into question the efficacy of perfectly sound plans for the betterment of the communications system in Pakistan. The Islamabad-Lahore Motorway is an excellent scheme but scandal arose in the manner of the hasty award to Daewoo without international tender. Recently the single tenderer for the Sheikhupura-DG Khan motorway tried a fait accompli in trying to persuade the PM into accepting its bid. Thankfully enthusiasm failed to get the better of good sense as it did in the case of Daewoo. Wise and mature leaders do not let themselves be carried away by the shenanigans of the unscrupulous.

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The Turkish miracle

Almost 70 years to the day, Ataturk laid the foundations of modern Turkey. As this Eurasian nation prepares to enter the last lap leading to the 21st Century, what Mustafa Kamal Pasha wrought is already visible as a miracle to the entire world.

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