THE ECONOMY OF SINDH
Sincere efforts making things bright
By AMANULLAH BASHAR
Sep 16 - 22, 2002
Sindh, a province with enormous economic potentials has always been suffering from financial constraints obviously due to excessive politicization and mismanagement of the available resources in the past.
Despite having a strong agriculture base in the countryside which, is strongly supported by the industrial and commercial capital at Karachi, unfortunately the economy of the province was never got up on strong footings.
Sindh has an edge over other provinces of the country in many respects including higher literacy rate, rich in human and natural resources, leading in production of natural gas and other petroleum products, its strategic location of international exposure by virtue of two sea ports and an international airport.
The province has another advantage of providing a business outlet to the industrial products produced in other parts of the country, which greatly help in boosting its revenue contributions to the exchequer. The province has another distinctive feature of providing job opportunities to the people from all over the country.
It is however unfortunate that instead of becoming the richest province of the country, the people at the helm of affairs in the past due to their quest for personal gains relegated the province to a situation where it has to survive on debts and Over Drafts of the State Bank of Pakistan and other loans from the federal government which also affected the living standard of the population of the province.
Apart from inefficiency in the planning for prosperity of the province, the political disturbances leading to widespread law and order situation in the province also adversely affected the economy of this province during the last decade. Besides severely disturbing the economic growth of the province, the persistent law and order situation played havoc to the social life including destroying the growth of education at the desired level.
The situation seems to have taken a turn around and there are signals for making things bright. It is for the first time during last 11 years that the province of Sindh has become free from all sorts of debt. Although the resources are the same but it is the professional management of the resources which has made all the difference. Due to better management and strong economic policies of the province, not only the international donor agencies have shown their interest in the development programme of the province but a number of foreign investors are also showing interest to enter into collaboration with the provincial government for various development programmes initiated by the provincial government.
This financial stability obviously is the result of professional management of resources and reforms in tax structure, strict discipline on lavish pubic expenditures.
The province of Sindh is fortunate to have a dynamic professional for its financial management in the form of Dr. Hafeez Sheikh. Dr. Hafeez, who is the provincial minister for finance says that with all reform measures Sindh has been undertaking in the financial and social sectors, it was possible to attract the interest of the World Bank.
Sindh, he said is committed to education, economic revival through streamlining development portfolio. Dr Hafeez rightly takes pride when he says that it is in recognition of these efforts that for the first time in the history of Pakistan the World Bank has evolved a special 3-year programme with the government of Sindh earmarking $100 million each year.
This financial assistance from the World Bank will be interest free loan at just 0.75 per cent service charges, which is certainly a highly soft term financing. This loan is to be repaid in 35 years, with a 10-year grace period. The province will focus on continuing with its reform programmes through this loan.
Though the support provided by the World Bank is appreciable, yet we would have to pursue this agenda even if they had not come forward in the interest of the people.
Basically, this reform programme is based on four parts. The first, there is financial management and discipline, second private sector development, third good governance and fourth and the last social sector service delivery.
Integrated into this programme are our own benchmark and a medium-term framework. We are trying to ensure this money is spent in way whereby gains can be consolidated and which accrue over longer period of time so that even if subsequent governments were inclined to squandering it, they would not be able to do so. Out of 100 million dollars, the provincial government used Rs2 billion to retire expensive government loans (with 17.7 per cent interest charged on it) by doing that we have saved some Rs400 million per year paid as debt servicing. Some of the money is used to create Rs1.2 billion-pension fund. The provincial government had not doing so far years and that is unwise financial management. Endowment fund worth Rs1 billion has been created for financing higher education for poor students at good universities in the province.
We want to finance them to get kind of education that will allow them to get integrated into the international economy.