REVIVAL OF ECONOMY
Besides being investor friendly the coming budget should also be people friendly
From Shamim Ahmed Rizvi,
June 18 - 24, 2001
The Chief Executive Gen. Pervez Musharraf, while addressing the 8th meeting of Economic Advisory Board, conceded that his government has not been able to revive the economy or winning investors confidence. He, however, claimed — and rightly so — that his government's single most important achievement was winning the confidence of the international financial institutions like World Bank, and IMF.
"The soundness of our economic policies has been endorsed by these institutions and this would certainly help in bringing turnaround in the economy in the coming years. Economy will be revived and investment climate will certainly improve", Gen. Musharraf added.
There can be no two opinions on this issue as not long ago Pakistan was invariably termed in these institutions as a 'one tranche' country due to the fact that on two occasions during the previous years of political governments, sanctioned soft-term credit lines from the IMF were cancelled after the disbursement of only one tranche under the standing agreements with the Fund. It is true that without any active relationship with the IMF, that is, continued financial support to a developing country like Pakistan, foreign private investment would remain on the sidelines. It is to be seen whether the renewed relationship of Pakistan with the IMF would also prove instrumental in attracting foreign private investment which has so far remained apathetic over the last five years.
Winning over the confidence of international donor agencies has been possible only because the government has been following their recommendations faithfully — some say even blindly — and during the last 18 months has taken many unpopular decisions which an elected government could not dare to because of adverse public reaction. Repeated increase in the cost of utilities, large scale retrenchments and taxing items of daily use, has added to the miseries of commonmen and adversely affected the popularity graph of the present government. The people are impassionately waiting for some relief in the coming budget as has been repeatedly pledged by the present government.
Assuring a better future for the people of Pakistan, the Chief Executive described the current lull in investment activity in important sectors like industry and services as one of the major problems on the economic front which his government could not tackle with positive results and exhorted the members of the business community to come forward with their investment plans in the corporate sector. He claimed that some friendly countries are coming with heavy investment in energy, communication, agriculture and infrastructure sector and that would certainly motivate and encourage other investors specially the Pakistani expatriates.
As for the major priorities in the policy pursuits of his government, the Chief Executive has boldly initiated plans to build medium size dams in different locations of the four provinces of the country, on which feasibility studies have been completed and construction work is expected to start in the next financial year. The important aspect of these projects is stated to be that the initial investment will be made from the government's own resources but at the same time funding from friendly countries has also been arranged. This would undoubtedly go a long way to effectively check the recurrence of water shortage for the much needed growth in the agriculture sector. At the same time steps were under way by the provincial governments to counteract factors responsible for wastage of irrigation water. These steps would include lining of the canals and widespread guidance for the use of water with utmost care. It was the water shortage combined with drought conditions that led to a sharp drop in the economic growth of the country in the current financial year. With regard to the process of privatization, which is an important element in the efforts to promote investment activity in the private sector, the Chief Executive expressed his confidence that some important public sector entities like the nationalized commercial banks, financial institutions and Pakistan Telecommunication Company Limited would be privatized and handed over to the private investors before long. This should be welcomed as a positive step implementation of which on schedule would be keenly awaited by the business community.
General Pervez Musharraf also promised an investor-friendly budget. The expectations about this budget are undoubtedly wide-ranging because it would not only unfold new measures to bring about an effective change for the better in the country's investment climate, especially in industry and other capital intensive avenues, but at the same time also unveil plans for actual implementation of taxation reforms and other fiscal proposals to enhance the tax yield.
Without a sizeable increase in revenues collection government cannot initiate any welfare programme for the needy and poor. Poverty and unemployment are on the increase and needed gigantic development projects in the public sector. Creation of new jobs for the unemployed — both educated and uneducated — should be the main focus of priorities in our future development programme. Besides being investor friendly the coming budget should also be people friendly.