Populist Path
Announced in the National Assembly a few hours after it was deliberately leaked to the media, the thrust of Federal Budget points to a turn to populism. Not going the whole hog points to General Elections not taking place immediately but possibly later in late 2007, i.e. unless something drastic forces an early 2007 date. Predictably govt ministers and officials, as well as those who support the govt and/or have reason to do so, swarmed the electronic and print media to sing the Budget’s praises. Predictably the Opposition opposed it for the sake of opposition, in a singular feat of negative reaction not one soul in the opposition saw even one iota of good in the entire Budget document. Where has objectivity gone?
Silent Rage
The government of Nawaz Sharif was sacked on the evening of Sunday April 18, 1993. On the following day, as a reaction to the controversial Presidential action, the Karachi Stock Exchange (KSE) witnessed the largest fall in its share index in one day. Though it did not equal the October 1929 Black Tuesday crash on Wall Street, the fact of the precipitous “Black Monday” dive shook domestic and foreign investor confidence in the state of the economy.
The policies of the previous government were seen to be liberal and supportive of a conducive economic environment. By enacting far-reaching reforms to unshackle the economy from bureaucratic embrace, Nawaz Sharif had inspired sustained economic investment, particularly at the lower end of the economic spectrum. Indeed, this had blown the share market much out of proportion to its real value, corrections in a free market atmosphere had brought share prices to much more realistic levels before Monday’s headlong fall. The fall in share prices may be a reflection of investor confidence being shaken but given a GNP of US $ 50 billion approximately, a capitalisation of US $ 7 billion is relatively small. The unreal high point of 1700 points plus being reached in January 1992, the market index had come down to the 1200 threshold, a psychological benchmark that the former Finance Minister had set as an indicator of impending trouble. If the crisis continues share index may still fall through the 1000 point floor and as such while the Caretaker Government may be determined to change the form of the liberalising reforms enacted by the previous Regime, it has no elbowroom to change the substance as that would reflect adversely on the consistency of our own policies. As it is about Rs 7 billion in share prices has been wiped out and such a financial catastrophe may be difficult for generally new market players to absorb.