Says he would not stay in power for a single day more than required to achieve objectives including revitalizing the battered economy

From Shamim Ahmed Rizvi, Islamabad
Nov 08 - 14, 1999

The Chief Executive, General Pervez Musharraf, in his first press conference in Islamabad on Monday listed his government's priorities which include economic recovery, provincial integration and rebuilding of the destroyed institutions. In his lengthy press conference lasting for over 100 minutes he spoke on almost every issue and answered every question of reporters on economic revival, accountability, legality of his government, future of ousted Prime Minister and return to democratic system. He hinted at holding a referendum to give legitimacy to his government. He declined to give any time table for returning power to elected representatives saying that he would not stay in power for a single day more than required for achieving the basic objectives, outlined by him.

When pressed for details of his plan for economic revival the General said that his finance minister Mr. Shaukat Aziz who had already arrived in Pakistan would be framing his economic policy which would be first approved by the National Security Council (NSC) before implementation. So it is evident that frame work of new economic policy will not be available for a week or so despite the fact that Shaukat Aziz, who had long discussion with World Bank and IMF officials in Washington before coming to Pakistan, started series of meetings with officials of Finance Ministry, CBR, State Bank, commerce and other departments immediately after arrival.

Revitalizing the battered economy is the most crucial challenge for the Chief Executive. He not only needs to introduce wide-range reforms but will have to assuage international concerns over the military intervention. The economy is plagued by perennial budget deficits, rampant corruption, stagnant exports, meager foreign exchange reserves and ailing banking and industrial sectors. It is a real daunting job to turn the economy around in such conditions. Commenting on the situation an economist of repute said on condition of anonymity: "It is early to assess whether the new administration would be able to deliver. One thing is, however, certain that the speed is rather slow while the precarious economic situation demands quick and urgent action. The fragile balance of payment position could increase the vulnerability of economy to external shocks. It calls for immediate remedial measures."

Musharraf has vowed to revive the economy and create an atmosphere conducive to foreign and domestic investment. He has initiated a drive to recover loans from bank defaulters and arrears of utility bills. The new government would have to establish an effective machinery to boost the tax revenues in a country where fewer than two per cent of the 140-million population pays taxes.

The banking system is another worry for the new setup because of the breakdown of governance and an absence of financial discipline. Full loan recovery targets would be difficult to meet. Official figures show loans given to the elite by state-run banks and not recovered so far, amounted to around Rs. 225 billion. Under the loan recovery drive, the State Bank of Pakistan has set November 16 deadline for defaulters to settle their accounts. It has said the names of defaulters who fail to respect the deadline would be made public and strict legal measures would be launched against them. "Such exercises in the past failed because of political pressures, but perhaps the campaign would now produce results under an administration led by the military which has pledged to clear up the mess," said an analyst.

The military government has also to find a speedy settlement of a three year-old electricity tariff dispute with independent power producers. The row, which erupted in 1997 after Sharifs came into power, has eroded investor's confidence. The ousted government failed to resolve the issue despite pleas by the International Monetary Fund.

The most tragic thing that happened on the economic front in Pakistan was the country's asymmetric reliance on both foreign and domestic loans. The bureaucrats and the politicians ruling the country went on committing excessive borrowings, so much so that now a situation has arisen where Pakistan is drowned in public debt to the tune of Rs 3 trillion, close to the entire GDP of the country. The debt servicing is estimated at Rs. 300 billion for the current fiscal year. All this was allowed to happen because of the mismanagement of the economy by the bureaucrats in collusion with the politicians or other governing bodies including military regimes.

Because of these factors, the economy now stands in utter ruin; there is capital flight taking place in full swing and in addition lacs of educated and competent people are leaving the country for good to more stable countries like Canada, Australia and the United States. In order to stop this outflow of capital and manpower, the present government will have to give priority to the revival of the economy. All other goals such as holding of elections and restoration of the so-called democracy will have to be thrown in the background for at least 2/3 years. During this interim period, the present regime will not only have to do something urgent to revive the economy but at the same time it will have to set up a large number of Commissions. They will undertake studies for purpose of restructuring and revamping the whole state-management system. "While doing all this, it is, however, necessary that the present regime should explain to the donors the fact that unless sound foundations are laid down for the viable functioning of the state, it will be of no avail to waste time in the restoration of old democratic order whose experiment has already miserably failed in Pakistan. Once Pakistan is allowed to be restructured, reformed and revamped on modern lines, it will prove a good partner of the donors as well as for the rest of the international community. In its present form, it simply can not play any positive role in the merging world economic order.

The general public which have suffered on account of loot and plunder by the elite and economic mismanagement has lot of expectations from the new set up. Some thing must be done to mitigate their economic miseries. The rising cost of living and over increasing rate of inflation has made it difficult for them to arrange two meals for their families what to speak of healthcare and education of their children. If it is not possible to provide some immediate relief to them, it should be ensured that there was no further increase in the prices of commodities of daily use. The rumour that, under IMF pressure, the government of General Musharraf is also thinking to increase the prices of petroleum products should be denied immediately. If it is agreed, it would lead to rise in the prices of every thing and as one observer commented "this will be the easiest way to malign the new set up.