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The changing attitude of Western powers

From Shamim Ahmed Rizvi, Islamabad
Apr 24 - 30, 2000

It appears that the sole super power of the world — the United States — which indirectly control the operations of the world donor agencies, has decided not to squeeze Pakistan economically and given a nod to them to restore normal channel of assistance to support the bruised economy of the country. This is an impression one gathers from the sympathetic tone of western diplomats in Pakistan about the present government as well as the promising signals from donor agencies like Asian Development Bank (ADB) and International Monetary Fund (IMF).

While talking to some of them at diplomatic functions (curiously at their initiative) one notices a lot of change in the attitude of Western diplomats towards the present government. They acknowledge, not in plain words however, that Gen. Musharraf government is doing well to unearth the loot and corruption of democratically elected rulers specially Benazir and Nawaz Sharif who ruled the country one after the other for over a decade. One gets a clear impression that Western world would not abandon Pakistan just because the country is being ruled by the present government. They are ready to grant Gen. Musharraf reasonable time to cleanse the stable with only one demand that he should not unnecessarily prolong his stay and restore the democratic rule as early as possible.

There may be more than one reasons for this positive change and encouraging signals. It may be because that Gen. Musharraf was been successful, through his many diplomatic initiatives, to convince US leadership of his sincerity and honesty of purpose fully sharing the concerns of the super power about the region. He may have asked for some time to implement the dotted programme. A cynical argument advanced is that the Western powers donot want to abandon Pakistan despite military take over and other pressing reason because they feel that by doing so they would only push it deeper into the lap of terrorism and may even force it to export its nuclear technology to meet its urgent economic needs.

Anyhow it now seems clear that Pakistan’s economic pressures will be much eased and it would not find it difficult to prepare a workable budget for the next year. Asian Development Bank has already announced a 3 year new package of US $ 2.8 billion while prospects for $ 2.5 billion for 3 years Poverty Reduction and Growth Programme are also fairly bright. If properly managed the two package can safely put the economy back on the track.

Leader of ADB mission, after 2 weeks stay in Pakistan Mr. Marshuk Ali Shah announced at a press conference in Islamabad last week that the bank will offer $ 2.8 billion to Pakistan under a new three year programme agreed with the government. However, the programme (2000-2003) will be continued if it is in line with the loan programmes of the International Monetary Fund (IMF).

"Since Pakistan is still under partial international sanctions, our assistance will mainly confine to basic human needs, development of social infrastructure and poverty alleviation", said the leader of the ADB mission. Briefing reporters, he said the ADB mission had concluded talks with the government officials on offering a new three year $ 2.8 billion lending programme. Out of $ 2.8 billion, 64 per cent of the assistance amounting to $ 1.8 billion would be in soft loans, he added. "In addition to that, the ADB will also provide grant technical assistance of some $ 23 million".

He said the ADB’s "Country Programming Mission for 2000" remained in the country for two weeks and concluded its deliberations with the senior government officials and the representatives of all the four provinces.

The proposed programme represented a mix of area development programme, education and health, infrastructure development and deepening of the reforms of the capital market. The new programme also includes assistance for restructuring of the power sector, legal and judicial reforms and rural micro finance.

Mr. Shah said the ADB had not provided any funding in 1998 owing to sanctions. "But we offered $ 403 million, out of $ 800 million programme meant for 1999". The bank was also offering funds for boosting exports and maintaining foreign exchange reserves level. Under the "Country Operational Framework Programme", the ADB’s assistance also focused on human and social development, improving economic efficiency, export competitiveness and governance and institutional strengthening, he added.

Before leaving for Washington members of Pakistani team headed by Finance Minister, Mr. Shaukat Aziz, for final talks with IMF Board, Governor State Bank, Dr. Ishrat Hussain and Secretary General Finance, Mr. Moin Afzal told newsmen in Islamabad last week that Pakistan had a fairly sound case for the grant of $ 2.5 billion IMF assistance under its new Poverty Reduction Growth Facility (PRGF) programme. "Performance of the economy over the past few months and prospects in the coming months are good", the two officials revealed adding that the position provided Islamabad a good change to secure new funding line from the IMF.

"The near-term economic scenario is stable and comfortable as the GDP growth rate is estimated to be 4.4 per cent as compared to 3.1 per cent in the last financial year", said Mr. Afzal. He said inflation had come down to three per cent and foreign exchange reserves remained stable.