propecia pregnancy

Sparking the Economy

There is nothing more important for re-vitalizing the economy than increasing employment opportunities, the increased cash flow in the economy has a snowball effect that in turn creates more jobs and so on. Maximum emphasis must also be put on population control, with population growth at nearly 3% the highest in the world we have diminishing job slots in Pakistan. Besides 3 million more hungry mouths to feed, we have to create at least 3 million more jobs, impossible even for the most vibrant of economies. That’s why we are playing “catch-up” all the time!


Mexico 1994, Pakistan 1996?

A confidential informal note being circulated in the World Bank seeks to compare the economic situation in Pakistan today with that availing in Mexico prior to the economy crash in 1994. To quote “Over the last three years, Pakistan’s macroeconomic performance has been disappointing. Real income per capita has hardly grown, while inflation and urban unemployment have risen. Although the country’s long-term growth potential remains favourable, prospects for sustained non-inflationary growth of per capita income are fraught with serious downside risks. The economy remains overly dependent on the cotton sector and highly vulnerable to external shocks and financial instability. Because of the unfavourable economic performance, there has been a noticeable rise in social and political pressures and loss of popularity for the current government. Concerned about potential short-term adverse impact of economic adjustment or key interest groups, the government decided in June 1995 to slow down the pace of reforms. However, this decision led to loss of credibility of government’s macroeconomic policies, emergence of serious fiscal and financial imbalances and eventually financial turbulence. Although the authorities are now trying to steer the economy back on track, and thanks to cotton’s bumper crop economic growth is forecast to accelerate, nevertheless, Pakistan’s macroeconomic/financial problem is much more serious than assumed by the authorities.” unquote. All in all, this is rather a damning indictment of Ms Benazir regime’s economic policies.


Loan Default

The State Bank of Pakistan (SBP) had to invoke on short notice little-used sections of the Banking Ordinance to change the management of United Bank Limited (UBL). Great fanfare had been made about UBL being privatised. Government of Pakistan (GoP) had already accepted an offer from Saudi Basharahill, a little known company owned by Saudi magnate Dr. Basharahill, capitalised at ú 2000 in an off-shore UK tax haven. For reasons suspected but not really known, the UBL privatisation deal seems to be in doldrums and SBP’s drastic action, ostensibly on behalf of GoP, seems to be a desperate move not only to shore up UBL’s defences against depositors’ run on the bank that was gathering momentum but also to divert attention from the privatisation debacle. Despite UBL being systematically looted by its own managers and by its powerful Union over the years, the strong foundation and inherent strength of the bank had ensured that the bank remained profitable till 1993. With the advent of the Ms Benazir regime, a sustained campaign began to induct only “loyalists” into the UBL hierarchy without any thought given to their integrity and competence or its adverse effect on UBL’s credibility as a financial institution. The appointed functionaries started dishing out questionable loans that far exceeded mismanagement and malfeasance (M&M) pre-1993. Haemorrhaging badly, UBL was put on the auction block for privatisation in what really amounted to be a rather motivated fire sale. That the whole edifice of cards was bound to come down on detailed scrutiny was a foregone conclusion that only the most optimist of GoP’s decision-makers could have been hoping to camouflage and/or avoid.

Pakistan’s Nationalised Commercial Banks (PNCBs) and Development Finance Institution (DFIs) are suffering from chronic bank default. If UBL is seen as an offender, it is only because privatisation has brought it into focus. Default has been taking place for over two decades. Probably the worst case of financial bungling may be in Habib Bank Limited (HBL) where excesses by banking executives, both professional and non-professional, reached such alarming proportions that in comparison Younus Habib (remember him) seems to be a petty thief. Once this scribe himself approached VA Jafarey to intercede in what was clearly an outrageous scam by the present bank management, Younus Dalia included. VA Jafarey, PM’s Advisor on Finance replied he could only advise the Pakistan Banking Council (PBC) to look into it but was powerless to take any action himself. With such toothless tigers in charge of financial monitoring, what does one expect? Put VA Jafarey out to pasture and/or put him out of his misery. One hopes that the saying “the bigger they are, the harder the fall”, does not come true for Pakistan’s biggest retail bank. National Bank of Pakistan (NBP) seems to be in a healthy state but figures (like appearances) can be deceptive, only time will tell whether NBP is doing as spectacularly as M B Abbasi is professing or whether the media projections are just another window-dressing for poor banking practices that may have fooled all (including this scribe) into glorifying him personally. As far as the DFIs are concerned, the lesser said the better, almost all of them are in trouble of some kind or the other due to loan default. Some like the NIT, ICP and NDFC are facing a liquidity crunch in being caught up themselves in the share market whirlpool or in trying to bolster a sagging share market on behalf of GoP.


Re-engaging the Economy

The year 1995 has been a hard year for Pakistan. On the receiving end for most of it, the bad news in cricket and hockey has only been exceeded by the economy turning from bad to worse. While we pulled back a few winners in spite of the best efforts of the ruling regime in the last few days of the year, things are grim. Our investment in Afghanistan has become a major foreign policy disaster and we may have lost our special relationship with Iran in the process. Despite spectacular success in dealing urban terrorism crippling blows in Karachi, the lack of serious political initiatives has alienated the core of Mohajirs from the national mainstream. While she remains a great political fighter, the PM stands alone in her manhood among the shambles of an inept, inefficient and corrupt administration. Surrounded by atrocious advisors who overwhelm the few dedicated ones around her by doses of outrageous flattery and public displays of adulation, the Head of Government has only shown flashes of the brilliance she is capable of, and that too when her own survival is threatened. From time to time, she has come perilously close to going off the deep end, particularly because of histrionic displays at some public meetings. She has compounded her own problems by not carrying out a ruthless purge of her economic team, choosing loyalty to some rather questionable bureaucratic ability in super-session to the vital economic interests of the nation.


Pre-budget Economic Review – Economic (or Bubonic) Plague? – I

This is the FIRST in a series of THREE articles on Pakistan’s economy)

The Government of Pakistan (GoP) has boxed itself into a corner by its rhetoric about a supposed economic miracle which is far removed from the actual health of the economy and the portents of its future. A relatively moderate (but reasonable) performance by the present regime in the face of concentrated domestic and external economic adversity has come out in bad light because of unnecessary bombast. About expectations and targets set forth far beyond bureaucracy’s ability to accomplish, particularly because adequate documentation of the economy is lacking. Four areas must be studied to obtain a comprehensive overall economic review, viz. (1) Growth, GDP and Production (2) Public Finance (3) Relations with IMF and lastly but most important (4) Inflation and Prices.


Deterioration of Financial Institutions

The three major reasons for the deterioration of the financial institutions in Pakistan are (1) nationalisation (2) dependence of both the government and the private sector for liquidity exclusively on the banking system and (3) pre-emption of substantial part of the credit by the government. A myriad number of smaller inter-locking factors have contributed to the decline of the credibility of financial institutions in Pakistan but most can be traced back to these aforementioned over-riding reasons.

Two major concerns led to the nationalisation of the banks in the early 70s by the first PPP regime. Of primary concern was the fact that control of finances of the country interfacing with that of assets were in the hands of a very small minority. The other reason was that the priority sectors were neglected inasmuch social and even economic development were not supported by credit allocation viz, agriculture, small industries corporation, transportation, construction, etc. Money was concentrated in the urban areas at a severe cost to the rural areas. A great bulk of the credit was going to industry and trade which claimed about 67% of the credit given to the private sector with only the balance 33% going to the rest of the private sector economy.


Financial Credibility

The enactment of the State Bank of Pakistan (SBP) Ordinance of October 5, 1993 by the Moeen Qureshi Administration giving the SBP considerable powers of autonomy with respect to monetary policy and the subsequent repeal by the present Ms Benazir regime as well as a fresh Ordinance replacing it thereof on Jan 1, 1994 has aroused quite a level of intellectual discourse within the economically knowledgeable both within and outside the country. The question of the impact on economic management has become of topical content and needless to say, well-wishers are looking forward to some kind of equitable working arrangement separating fiscal policy from monetary policy which would be in the best interest of the country’s economy.

The principal question to answer is what should be the level of autonomy of a Central Bank in a country like Pakistan? It is commonly believed that in developing countries Central Banks are (and must be) universally subordinated to the Government in the overall economic interest. The factual relationship could be the other way around, mainly that Third World countries have remained backward because among other things they have not allowed the development of various institutions vitally necessary for the emancipation of the economy. This is not much unlike the process of democracy building its roots in a country, dependant mostly on strong policies rather than the frequent holding of elections or number of political parties, etc. It is extremely important that developing countries promote institutions like the Central Bank, the various planning agencies and related financial institutions so that they can graduate into financial maturity. It is a tragedy that in Pakistan there is no tradition of commercial banks or other financial institutions having full-fledged Policy and Research Departments. Therefore, our Economic Analysis is generally very poor and usually not backed up by the information data that is the prime pre-requisite of carrying out such evaluation e.g. credit rating and project appraisal agencies in the private sector, it being understood that public institutions will always be under pressure to produce favourable data for the government in power. The aforementioned must constitute the backbone of correct decision-making for resource allocation by the government.


Jobs and the Nation

Two mighty Superpowers confronted each other in a four decades old cold war till a scant year or so ago with enough bang in their arsenals to blow the world up many hundreds of times over. Though the former Soviet Union’s weaponry is still intact for the most part in 12 or so different hands, the only effective Head Honcho left is the USA. As the clear winner of the cold war, George Bush would be expected to be riding high in the esteem of his own electorate. In addition to the demise of the Soviet Union, President Bush had orchestrated the world campaign, barely a year or so ago, to oust Iraq from Kuwait. His spectacular successes in foreign policy initiatives have been dwarfed by the spectre of continuing recession, jobs are more important to the US public than the fate of Gorbachev, Yeltsin or Saddam Hussain. The same factor of economics that was primarily responsible for consigning the Soviet Union to oblivion is now threatening to erode his candidacy for a Second Term. If the populace seems unduly ungrateful, it only seems to confirm man’s over-riding and pragmatic concern for one’s own self-interest.