The eventful year 2000 paves way for the years to
By AMANULLAH BASHAR
Dec 25 -31, 2000
Though the beginning of 2000 witnessed a sluggish
start both on economic and political fronts, the finish of the year
seems to be full of events.
The resolution of 3-year old tariff dispute between
WAPDA and Hubco, approval of IMF programme, arrival of Parco refinery
into production, revival of Iran-Pakistan-India gas pipeline, defence
exhibition 'IDEAS 2000', local body's elections, consent to public
Hamood-ur-Rehman Commission report were all of national significance
from economic and political point of view. However the exile of former
Prime Minister Nawaz Sharif and his family was of course the event of
The present government sees the decision of Nawaz
Sharif's exile as of economic and political significance for the
country. Nevertheless, it is the time, which always proves or
disproves the perceptions.
Since the release of Nawaz Sharif or technically
speaking his exile has set an example, people in general are expecting
release of other politicians on the same pattern. Reports are already
appearing regarding possible release of Asif Zardari in similar
There is another school of thought, which believes
in chain reaction of the decision and may incite other politicians to
get the similar treatment. The reports appearing in the press
regarding possible exile of Asif Zardari seem to be the link of that
chain. If other political convicts were also allowed to leave the
country it would help keeping major political forces away from
Pakistan hence giving a walk over to the present regime to carry out
economic and political reforms without any interruption from political
opponents. People having economic and political insight are however
attaching significance to the sequence of events such as approval of
IMF package, exile of Nawaz Sharif and resolution of WAPDA-Hubco
The word about exile of Nawaz Sharif and family
spread like jungle fire on December 10, 2000 when the media gave
headlines treatment to the event in and outside Pakistan. Obviously,
the event was talk of the town and still occupying focal point space
in the newspapers.
Though it was the decision taken by the Chief
Executive Gen. Pervez Musharraf, however for formal procedures,
President Rafiq Tarrar pardoned Nawaz Sharif's 25-year jail sentence
and exiled the former prime minister and his family to Saudi Arabia.
The court decision regarding disqualification of Nawaz Sharif for 21
years would also stay and his 70 per cent properties would be set for
the various default payment and clearance of loans and defaults.
Those accompanied by the exiled Nawaz Sharif
include his father Mian Sharif and mother Shamim Akhtar, wife Kulsoom
Nawaz, jailed son Hussain Nawaz, daughter-in-law Saira Hussain,
grandson Zakariya, daughter Mariam Safdar their two kids Mehrunnisa
and Junaid, Abbas Sharif, his wife Safia and two sons Yousuf Abbas and
Aziz Abbas, brother and former chief minister Punjab Shahbaz Sharif
his wife Nusrat Shahbaz and daughter Rubab Shahbaz.
Chief Executive Gen. Pervez Musharraf, while taking
the nation into confidence over the decision, has said that the
decision to exile Nawaz Sharif has been taken in the best and larger
interest of the country. The decision would introduce a new political
culture and leadership, ushering in a new era of hate-free politics.
It would also introduce politics of reconciliation; the Chief
Executive expressed the hope.
'It will usher in an era of money free politics',
it will bring in an overall political harmony and political stability,
The decision will contribute positively towards
economic development. It would also correct international perception
against Pakistan. He felt that the decision had a massively positive
impact internationally and all the Muslim and Western countries have
appreciated the move. There must be some good reasons that led to this
decision. There is difference of correct and popular decision and when
important decisions are taken all the aspects must be observed before
making an important decision. When there is unpopular decision then
there should be courage and conviction for it said Gen. Musharraf. He
said that he has taken this decision above his personal interest.
"Justice demands that punishment should not be vindictive. The
element of vendetta should be shunned," he said. According to
Chief Executive, Crown prince of Saudi Arabia had requested for his
exile, which was accepted after thorough analysis. Giving the details
and political aspects of the decision, Gen. Pervez Musharraf said that
the country would enter new era of politics. Referring to political
atmosphere during past 12 years in the country, he said leaders of two
major parties Nawaz Sharif and Benazir Bhutto were busy in the
politics of hatred. When one became Prime Minister the other would not
cooperate and try to oust the other after two years. At that time
there were two presidents and three prime ministers. Each of them
cancelled development projects initiated by the other during his
tenure and the country became a graveyard of development projects. Who
is the biggest loser? Certainly Pakistan, the Chief Executive
observed. The economy of the country deteriorated due to these
reasons. The prestige and reputation of Pakistan was also deteriorated
abroad, affecting the economy and foreign investment. Recalling his
visit to Karachi Overseas Chamber of Commerce, he said that
businessmen told him that investment shies out of Pakistan because
there was no sustainability. The policies of the government are not
credible and sustainable and have no continuity. The national economy
suffered due to these reasons during the last 12 years and due to
politics of hatred between these two leaders of Pakistan Peoples Party
and the PML, he regretted.
The politics of money was also introduced during
the last 12 years and these two leaders are responsible for that. They
corrupted all the institutions. Both the leaders who were against each
other are now trying to make coalition in a very awkward manner,
however nobody would allow them to exploit this country anymore, he
said. Regarding the world opinion about the decision of exile,
Musharraf said that world leaders have written letters, congratulating
on this bold decision describing it as the demonstration of tolerance
and moderation. Extreme action against political leaders is not
appreciable in the eyes of world community because of backwardness and
rigidity. All these things create negative impact on foreign
investment. General Musharraf was confident that the decision would
improve Pakistan's image in the world and investment climate in the
The resolution of the three-year old dispute
between WAPDA and Hubco, of course a nasty obstacle in the way of
economic growth of the country, no doubt is one of the major
achievements of the present regime. The trouble between the two power
companies is stated to be a gift of the inefficient political
governments, which in effect harmfully eroded the image of the
country. The present regime has played the role as troubleshooter by
bringing the nasty issue to an end.
The agreement actually is an outcome of extensive
discussions in recent weeks between three parties at the highest
level. Signatories of the agreement are M. Zafarullah Khan, Secretary
of Water and Power, on behalf of the President of Pakistan. Lt. Gen.
Zulfiqar Ali Khan Chairman WAPDA and Mohamed Alireza Chairman of Hubco,
Peter Giller, International Power's Chief Executive Officer, joined
Mr. Alireza in representing Hubco in the negotiations.
Reduction in power tariff is the gist of the
agreement enabling WAPDA to save $63 million per annum.
The revised agreement would provide power to WAPDA
at a reduced rate of 5.6 cent per kWh instead of previously charged
The agreement is expected to generate a cash flow
of 10 million pound sterling to International Power. In addition there
will be a receivable due to Hubco reflecting past underpayment for
electricity. One third of the total receivables will be paid on March
31, 2001, it is learnt.
The issue was formally resolved when Mohammad
Alireza, Chairman Hubco and Lt. Gen. Zulfikar Ali Khan, Chairman WAPDA
reached an agreement on Dec 18, 2000. The analysts however feel that
there seems to be much more than it meets to the eye behind the
Before reaching a resolution, a nightlong meeting
between the highest government authorities and the Hubco
representatives was held to sort out the problem.
As a result of this agreement two foremost
obstacles in correcting the country's external imbalance have been
overcome with the resolution of the Hubco dispute only a few days
after the signing of a stand-by agreement with the IMF.
It is hoped that in the process, the way has been
cleared for improvement of relationship with prominent international
investors to serve the cause for privatization of public sector units
such as PTCL, KESC, PSO, Habib Bank and other units waiting for
Settlement of the chronic Hubco issue soon after
resumption of IMF programme indicates that the two issues were
interconnected, the experts feel.
Economists analysts feel that the settlement of the
issue would greatly help paving the way for investment especially from
external resources besides rebuilding country's image.
Under the agreement the two parties have agreed to
withdraw all allegations against each other which include withdrawal
of civil and criminal cases against Hubco. According to reports the
government would move a request to the courts that an agreement has
been reached and the government would not pursue the cases and then
the courts may discharge the cases.
According to Chairman WAPDA, the two parties would
withdraw cases against each other pending in the international court.
The agreement between WAPDA and Hubco may lead to save $56 million a
year with a cumulative effect of $3 billion over the life span of 27
years of Hubco project.
Initially the Hubco had been charging 8.77 cents
per kWh, which amounts to Rs5.22 while WAPDA was receiving only Rs3.22
per kWh. Agreements with other IPPs have already been reached and they
have reduced their tariff to 4.7 cents from 5.7 cents per kWh, which
would save another 3 billion dollars to WAPDA over the life span of
Ideas-2000 was an impressive 4-day international
defence exhibition held at Karachi in November last. The exhibition
was first of its kind ever held in Pakistan. Defence chiefs and
ministers attended it from some 40 countries.
The defence products, especially Al-Khalid and
Alzarar tanks, built with Chinese assistance proved to be the main
attraction of the event. Malaysia and Saudi Arabia were among several
other countries to have shown interest in buying arms from Pakistan.
According to Maj. Gen. Ali Hamid, chief coordinator of the exhibition,
Saudi Arabia is interested in the Mushshak trainer aircraft and
Malaysia has shown keenness on anti-tank missile systems and the
Agosta submarines. The large scale-manufacturing sector except the
textile sector is showing hopeless results for the last many years.
The defence exhibition has kindled the hopes for the large
scale-manufacturing sector to operate on the scale of the economy if
Pakistan enters the exports of its defence production at a large
Pakistan's economy had to go through difficult
times for the second consecutive year in 1999-2000 and despite a 4.8
per cent growth in the economy average income of each Pakistani stood
below Rs2000 per month.
According to annual report released by the State
Bank of Pakistan (SBP) last month, the gross domestic product (GDP)
grew by 4.8 per cent mainly due to a 7.2 per cent growth in
agriculture sector. Major crops recorded an impressive growth of 13.1
per cent against targeted 3.2 per cent, manufacturing sector saw a
nominal growth of 1.1 per cent against the targeted 6.2 per cent. The
large manufacturing sector recorded a regression of 0.7 per cent. The
services sector grew by 4.5 per cent against the target of 5.2 per
cent. Pakistan avoided defaulting on foreign debts. The government
managed to pay $3.7 billion to foreign creditors and deferred payments
of $3.9 billion through rescheduling and rollovers. According to
report, the country may have to defer foreign debt payments of $2.2
billion through rescheduling during the current fiscal. At the end of
June 2000, total foreign exchange liabilities stood at $37.3 billion
or 61.3 per cent of GDP including foreign debts of $32.7 billion or
53.8 per cent of GDP. The total debt including domestic and foreign
debts stood at Rs30.95 trillion or 97.5 per cent of GDP in 1999-2000,
up in volume from Rs29 trillion in the preceding year but down in
terms of GDP percentage in 1998-99, the total debt of the country was
almost equal to the GDP.
While other major crops like cotton, wheat and rice
performed well, the sugar sector continued to be a problem area for
the government, millers, and growers as well as for the consumers.
During the year sugar price witnessed an increase of Rs10 per kg as in
the early part of the year it was being sold at a price of Rs18 per
kg, which gradually jumped, to Rs.27-29 per kg during the year. The
sugar sector also witnessed the worst ever crisis when the sugar mills
were forced to shut down the crushing operations due to
non-availability of sugarcane. The growers were demanding Rs60 per 40
kg instead of the official price of Rs36 per 40 kg. Though the millers
were agreed to pay even Rs45 but the growers believed to be backed by
political forces turn down the offer forcing the mills to shut down
their crushing operations. The crushing operation was resumed when the
growers succeeded to bargain a price of Rs50 per 40 kg. Although the
crisis were over yet experts feel that the price of sugar may not come
down from Rs29 per kg during next year. The increase in sugarcane
price will add 8.7 per cent to the cost of production while levy of
sales tax at 16.6 per cent may bring the cost at Rs27 per kg, if Rs2.5
were included as the trade and other incidental the selling price may
oscillate between Rs29-Rs30 per kg during next year.
The first phase of the party-less, local government
elections in 18 selected districts of the country will be held on
Dec.31, 2000. The results of these elections would be announced by the
Election Commission on Jan.6, 2001.
Another feature of this local government system is
that for the first time 18-year old people will be allowed to cast
votes as the government had reduced the age limit from 21 to 18 for
exercising the voting rights.
The Chief Executive brushing aside all rumors
regarding postponement of the elections on account of legal hitches
has assured the nation that the implementation of the devolution plan
would continue without any hazard.
The elected representatives at district level would
be given administrative authority. District Coordination Officer and
all government staff would be subordinate to the Nazim elected under
this system. Financial authority would also be delegated to the
elected representatives. Under the system speedy justice would be
provided at the lowest level. District level judiciary would be
restructured and conciliation courts would be set up at union council
level so that dispute resolution could be done before litigation
process starts. Under the system a new Act would be enforced replacing
Police Act 1861 that is 140 years old and has already lost its utility
in the present situation. These steps are expected to create a
revolution in the political set up of the country.
In the first phase, elections are going to be held
in Bannu, Lucky Marwat, Dera Ismail Khan and Tank district of the NWFP,
Dera Ghazi Khan, Rajanpur, Layah, Muzaffargarh, Sargodha, Bhakkar,
Khushab and Mianwali districts of Punjab, Larkana, Jacobabad and
Shikarpur district of Sindh, Kech Gwadar and Panjgur districts of
The districts selected for the second phase of
election to be held in February are Kohat, Hangu, Karak, Mardan and
Swabi in the NWFP. Bahawalnagar, Bahawalpur, Rahim Yar Khan,
Gujranwala, Hafizabad, Gujrat, Mandi Bahauddin, Sialkot and Narowal of
Punjab. Naushahro Firoz and Nawabshah in Sindh and Naseerabad,
Jaffarabad, Jhal Magsi and Bolan in Balochistan.
Some positive rather corrective decisions taken by
the government during the year 2000 have provided basis for the
economic managers to produce good results. The resolution of WAPDA and
Hubco dispute would not only open the gates for foreign investment but
certainly help carrying out the privatization of large public sector
units successfully in the year to come. Though the people at the helm
of affairs are the claimant of taking political and economic decisions
in the larger interest of the nation yet the benefits of these steps
have not reached to the grass root level so far. People generally
expect some relief whenever a new team come to power and people were
naturally were attaching similar expectations with the present regime.
Instead of getting any relief people are faced with unabated price
increase of essential items. The price hike has further reduced the
buying power of the common man. Irrationally imposed taxes, surcharge
and additional surcharge on electricity consumption have become
difficult to swallow any more. There is an urgent need to take
remedial steps to bring down the electricity charges to an affordable
level. Increase in oil prices is not the only reason for making the
electricity charges unaffordable in effect it is because of a number
of taxes, levies, surcharge and additional surcharge making
electricity as the most expensive thing of the daily life.