Low key but determined efforts to produce tangible results
By SHABBIR H. KAZMI
Nov 22 - 28, 1999
During this past week three federal ministers were in Karachi. Among
them were agriculture, commerce and finance ministers. Each one had specific reasons to be
in the city. While the CE, Pervez Musharraf, has promised to keep the media updated but
the ministers were hardly willing to create any euphoria or false hopes. Shaukat Aziz,
finance minister, remained the most sought-after person among the three ministers. This
was due to the nature of information regarding recovery campaign and the indications about
the economic policies of the government. Every one in the country was keen to know the
outcome. The last press conference of the finance minister at State Bank of Pakistan was
brief but clarified at least one point regarding the total defaulted amount.
Till recently no authentic figure was available and analysts were
making wild estimates. It was said to be in the range of 250 to 300 billion rupees. The
minister made it clear. Out of a total of Rs 211 billion, Rs 146 billion was the target.
The principal amount was less than Rs 100 billion and the balance amount was the mark up.
The amount collected, as cash, was over Rs 8 billion. Besides, other securities including
bonds, share certificates and other securities were offered. The experts estimate the
worth of these securities around Rs 3 billion. According to some analysts the figure may
not look impressive but it is incredible achievement when one looks at the fate of
The finance minister also met the heads of financial institutions to
get information on the outcome of the recovery drive and to formulate the strategy for
expediting the process of accountability. Now the bankers who had approved loans
imprudently will also be facing the proceedings. It was a much awaited policy decision
after promulgation of ordinance on recovery of defaulted loans.
The minister also met the directors of Karachi Stock Exchange, members
of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of
Commerce and Industry (KCCI). He was in town to assure the business community of the
support of the government to ensure normal business activities in the country, to boost
the morale and restore the confidence of investors. He made it clear that despite the
recovery drive the credit extension would not be affected.
It was interesting to note that the business community was bent upon to
make the finance minister believe that most of them were not 'wilful' defaulters. It was
the government policies which were responsible for their inability to repay the dues in
time. The minister promised to look into the various policies also. However, a large
number of securities analysts say that it is a few sponsors who have cheated the financial
institutions at the largest scale. These analysts also go to the extent of saying that not
only the defaulters but the bankers who were involved in imprudent lending should be
Till the beginning of last week of the stipulated period, many
Pakistanis were not taking the recovery drive seriously. However, the minister made it
explicit and point blank that the government was serious this time. He also made it clear
that the initial drives was against 'wilful' defaulters where the outstanding amount
exceeded Rs 100 million. However, he also warned that the campaign would continue and
every defaulter would be forced to clear his outstanding dues or face the legal
The arrest of some of the defaulters, including some retired services
people, has upset many. Not only this people expect more arrests. While an ordinary man is
not worried about his or her arrests, the rich who have ripped-off the financial
institutions are in real hot spouse. Though, many politicians still claim that these
amounts do not pertain to them they cannot deny that their spouse are also clean
most of the loan were solicited by using political connections.
The Karachi Stock Exchange has become, somewhat, stable after the
initial selling pressure in mid October that was but expected. Many groups, having
political connections, were enjoying huge credit from NCBs. Soon after initiation of
recovery drive it was expected that they would be forced to liquidate their holdings. On
the one hand, they no longer had access to the inside information and to use it to their
advantage. On the other hand, they were obliged to return the borrowed money, they had
acquired. The market is expected to further stabilize as it is appears that the new
economic managers are prepared to resolve IPPs controversy amicably.
It is also evident that improvement of law and order situation in
general and in Karachi in particular has accelerated the economic activities. There are no
indications of recession and prices, in general, are stable. However, the volatility in
cotton prices demands immediate attention.