PAKISTAN SEEKS MASSIVE INVESTMENT OF $60BN
FOP SUGGESTS SUBMISSION TO IMF TO KEEP CHECK ON SPENDING HABITS
SHAMIM AHMED RIZVI
Dec 01 - 07, 2008
Pakistan has sought massive investment support from Friends of Pakistan Forum of about $60billion and presented a list of projects of vital national importance before the participants during the preliminary meeting of the forum held in Abu Dhabi on November 17. The Pakistan delegation felt reassured as the participants promised to study the projects and come back with concrete proposals in a meeting to be held in Islamabad in January, 2009. The group once again pledged to help Pakistan to bring financial stability in Pakistan.
A source in the Planning Commission revealed that Pakistan is seeking 60 billion dollars worth of investment from friendly countries for around 71 identified projects, which include 9 billion dollars worth national trade corridor construction of 3000 kilometers of roads; 4.75 billion dollars construction of big dams (Bhasha-Diamer and Munda) as well as Thar Coal development; 1.45 billion dollars construction of small dams in the four provinces; 646.1 million dollars surface, sprinkler and drip irrigation; 2 billion dollars special agriculture projects inclusive of food grain storage, value-addition, research and farm forestry; 1.12 billion dollars for improving college education; and 2.07 billion dollars for establishing universities of engineering, science and technology.
According to a senior official who participated in the technical level negotiations in the FoP meeting, Pakistan has presented a comprehensive plan to develop and complete projects of national importance. To a question as to whether Saudi Arabia has mentioned in the meeting any modus operandi of extending oil facility to Pakistan, which the kingdom has assured, the official said there was no mention of oil facility from either side. He clarified that the Saudi oil facility is purely a bilateral issue and both countries are vigorously working on it. The official said that 62 projects worked out by the Planning Commission have been placed before the FoP forum, seeking investment to put the country on road to progress.
The official said that Pakistan also sought investment in building 32 medium and small dams across the country. The forum, he said, was also concerned that Pakistan badly needed the construction of quality universities and more terminals and berths at Gwadar port. He said that all the participants of the meeting were willing to extend financial and technical help to initiate and complete the 62 projects.
Representatives from Australia, Canada, China, France, Germany, Italy, Japan, Saudi Arabia, Turkey, the United Arab Emirates, the United Kingdom, the United States, the European Union, the European Commission and the United Nations were in consensus to bail out Pakistan, which is playing pivotal role in the fight against deadliest wave of terrorism.
The representatives will now go back to their respective capitals to discuss the projects indicated, suggested and proposed through various presentations made at the meeting to see where they can help.
The FoP forum, set up in New York in September, has completed its second meeting focusing on a working plan and the identification of areas in which Pakistan would benefit from assistance. As has been clear now for some weeks, the forum has no plans to extend cash hand-outs to Pakistan. Instead, it hopes to help the country strengthen its own economic foundation by promoting investment within it. Four other areas for assistance - development, security, energy and institution building ñ were also identified during the meeting, attended by low- to middle-ranking officials from over a dozen countries as well as representatives from the EU and the UN. The discussions held at the forum will be taken forward at a ministerial-level meeting early next year in Islamabad and expert-level consultations.
The unusual new body obviously sees, as its primary role, the need to extend moral support to Pakistan rather than help in concrete terms. This had indeed been made clear to Pakistan early on, ever since the forum was set up, with the country's president emphasizing he wished to 'learn how to fish' rather than being provided with it.
While the world is naturally reluctant to see Pakistan collapse this would be catastrophic given its central role in the battle to ward off terrorism. There is also an obvious reluctance to dole out to the country. For this reason the Friends have insisted Pakistan to submit to an IMF regime so that a check can be kept on its spending habits. Indeed, the setting up of the Forum in some ways complicated the task of seeking aid. Both Saudi Arabia and China, the two nations on which Islamabad had pinned its highest hopes as the extent of its financial crisis became clear, have been hesitant to dole out money within the setting of a bilateral forum.
Given the humiliating situation we face now, Pakistan's priorities must be to put its own house in order so that it can extract maximum benefit from the attempts that will be made by members of the Friends forum to encourage investment within it. Rather than hoping that the Obama administration will deliver financial assistance, Pakistan's managers must devise strategy to conserve and better manage their own resources.
There is as yet little evidence that we are willing to enforce tougher fiscal discipline at home. Our extravagant cabinet, the decisions to take huge contingents on trips overseas and the style in which members of the government conduct themselves suggest that the true gravity of Pakistan's economic situation has yet to hit home. Islamabad must remember that a time may come when there may be no friends at hand to pull it out of the pit into which it has a tendency to recurrently fall on.
Independent economists have expressed serious reservations to the list of projects presented before the forum. According to them priorities are wrong. Why does the government's premier economic planning arm envisage greater outlay on road development relative to the energy sector, given the fact that the country is reeling from an energy shortfall that has accounted for a decline in farm productivity as well as industrial output?
Many economists have cited the recently released figures of industrial decline as positive proof that the Pakistani economy is now in a recession. That we are in a recession not because of the global financial crisis but because of an energy shortfall is patently evident to all. While international donor agencies are particularly hesitant to support dams because of their implications for resettlement and environment, yet it is imperative for the Planning Ministry to priorities the 71 projects in an effort to ensure that Pakistan maximizes the return on financial support from external sources. Besides, while roads are important from an economic development perspective and there is evidence to suggest that a national trade corridor linking the country internally may be successful its impact on regional trade through increasing connectivity with India and Afghanistan is unlikely to bear fruit in the short to medium run with the ongoing war on terror in Afghanistan and the slow pace of confidence building measures between India and Pakistan.