------------------------------------------------------------------- DAWN WIRE SERVICE ------------------------------------------------------------------- Week Ending : 05 December 1998 Issue : 04/48 -------------------------------------------------------------------
Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS ===================================================================
NATIONAL NEWS + Paris Club aid put on hold + IMF action pushes down reserves to $450m + CTBT & other issues: US tells Pakistan to take solid steps + Nawaz links signing of test ban treaty to Kashmir issue solution + Three military courts start work today (05 Dec'98) + Pakistan expresses concern at Indian military exercises + Ordinance promulgated: Sales tax rate raised to 15pc + New Zealand confirms it will lease 28 F-16s + Railways reorganized to eliminate deficit --------------------------------- BUSINESS & ECONOMY + Pakistan's credit rating further downgraded + Govt borrows Rs 6.36bn from banks + Recovery of Rs9bn: Ittefaq group executive quizzed + $350,000 paid in advance to PTCL adviser + Security for loans: SBP extends liquidation date of FCY deposits + 'More incentives needed to boost gold exports' + Freight issue: No early end to exporters' woes + Cement makers decline to bring prices down + Business facing problems on export proceeds + Stocks lose 63 points, break barrier of 1,000 --------------------------------------- EDITORIALS & FEATURES + The city of Karachi Ardeshir Cowasjee + Snatching back our rights Irfan Husain + Beyond the bailout Sultan Ahmed ----------- SPORTS + Amjad Khan rises to No.15 in world squash ranking + Sohail faces the axe: Captain for Indian tour on council's agenda + Zimbabwe register maiden 7-wicket win against Pakistan

Paris Club aid put on hold 
M. Ziauddin

ISLAMABAD, Dec 4: Pending a final decision by the Paris Club all 
repayment obligations of Pakis-tan with respect to bilateral 
official development assistance (ODA) will come to a standstill 
from Dec 10, 1998, the day the Club starts hearing Islamabad's case 
for debt rescheduling.
This freeze will not apply to repayment obligations concerning 
multilateral assistance and private loans.
Official sources did not like to hazard a guess as to the exact 
amount of repayment that would remain frozen pending a final 
decision by the Paris Club or to the period it would take the Club 
to reach a decision.
Some of the finance ministry officials were not even sure if the 
Paris Club meeting would actually start on Dec 10.
One source believed that the size of the amount would not be more 
than $600 million and that it would take about three months for the 
Club to give its verdict.
Others said that the total amount of repayment that would remain 
frozen was over $1 billion but it would take as long as eight 
months for reaching a decision by the Paris Club.
While the negotiations with the Paris Club are going on, the IMF 
would monitor very closely the performance criteria and the 
structural reform targets fixed in the Policy Framework Paper (PFP) 
signed between Pakistan and the Fund in November. Any digression or 
slippage would mean automatic curtailment of the Paris Club 
Very few here have any idea about the complexities of negotiating 
with the Paris Club for rescheduling.
However, officials said that the Club would expect Pakistan to 
submit a paper at least before the start of the negotiations on Dec 
10 detailing what kind of loan repayments did the government want 
rescheduled, in what way, how Pakistan planned to meet the 
rescheduled obligations and when.
After all these modalities are worked out and agreed upon by the 
Club members by consensus, the Pakistani team will then negotiate 
with each bilateral donor separately within the parameters agreed 
with the Club.
An IMF team, especially trained in these matters, is expected to 
assist the Pakistani team in these negotiations.
Pakistan is also looking around for a consultant of international 
repute with enough experience of negotiations for rescheduling of 
various kinds of debts.

IMF action pushes down reserves to $450m
Ihtasham ul Haque

ISLAMABAD, Dec 4: Pakistan's foreign exchange reserves have gone 
down to $450 million, making the job of the planners almost 
impossible to avoid default specially after the IMF's executive 
board postponed its scheduled meeting on Dec 15.
Informed sources told Dawn here on Friday that the government's 
hopes to meet its pressing foreign debt liabilities in December 
were dashed when the executive board of the Fund unexpectedly 
decided to postpone its meeting till January and that, too, without 
indicating any date.
Senior officials of the ministry of finance remained busy 
throughout the day on Friday discussing how to meet the debt 
liabilities and improve the precarious balance-of-payments 
Since the finance minister was accompanying the prime minister on 
his tour to the United States, finance secretaryJaved Khalid and 
the special secretary for finance held a meeting and discussed the 
situation arising out of the negative signals from Washington. They 
both have been avoiding telephone calls from the reporters.
The sources said the government was planning to borrow $250 million 
to $300 million from the overseas branches of the nationalized 
commercial banks for 15 to 20 days to avoid default. "We have on 
our disposal a grace period of about eight to 10 days to make 
payments on our foreign loans," said a source.
"The government will delay all loan payments other than those of 
the IMF, World Bank and the Asian Development Bank to try to escape 
this default", he added. "Now we will have to resort to the 
accountant's tricks to escape this imminent default," he remarked.
Pakistan is to make a payment of about one billion dollars in 
December and it was expecting to have 500 million dollars from the 
IMF after its executive board met on Dec 15 and approved the 
The sources said it had come as a great shock to the planners who 
had earlier assured the prime minister that they would pull through 
during the current financial year even against heavy odds.

CTBT & other issues: US tells Pakistan to take solid steps
Shaheen Sehbai

WASHINGTON, Dec 3: The US bluntly stated on Wednesday that Pakistan 
would have to help itself and "take concrete additional steps" 
before Washington could remove any further sanctions as summit 
talks between President Clinton and Prime Minister Nawaz Sharif at 

the White House appeared to have made no headway on key issues.
A terse, down-to-earth and at times almost rude briefing by two 
senior US officials, made it clear that the two sides were 
deadlocked on who should now make the next move on crucial issues 
like non-proliferation, CTBT, FMCT and Osama ben Laden, and the 
ball was in Pakistan's court for all practical purposes.
The tone and tenor of the White House briefing, which came after 
several hours and repeated delays with correspondents waiting 
almost for four hours, was harsh and authoritative. It was in sharp 
contrast to Shamshad Ahmed Khan's briefing earlier in which he had 
nothing concrete to say except repeatedly stressing that a "better 
understanding" of each other's point of view had been achieved.
In the diplomatic jargon, a better understanding of the other 
side's point of view means that each side had spoken out its case 
and there was no agreement on how to proceed further as neither 
side appeared to "accept" the other's point of view although they 
understood it clearly.
Although Bruce Riedel began his briefing with saying that the PM-
President meeting was "very warm, very positive". The comments he 
and Inderfurth made later indicated that the Pakistanis were not 
very happy with what they were being bluntly told to do, in simple, 
loud and clear terms.
Inderfurth stated that the US was unable to help Pakistan unless 
they helped themselves and took additional and concrete steps which 
were needed before the US could make any further move to remove 
more sanctions.
"The President reaffirmed our view in his talks with Nawaz Sharif 
that more progress was needed to be made on these issues before we 
would be in a position to remove all of the sanctions," senior 
National Security Director Bruce Riedel said at the White House 
Asked about Pakistan's national security dilemma as a result of 
prolonged American sanctions and depleted conventional weapons and 
how was the US expected to help it resolve the dilemma, Inderfurth 
made the terse statement: "We can't help it unless it helps itself. 
The fact is that the President was able to exercise limited waiver 
authority under the Brownback Amendment on economic issues. 
Brownback does not cover military-to-military relations. For us to 
have any opportunity to address the conventional military needs of 
Pakistan, it will have to take further steps to address our 
concerns on non-proliferation, which would provide us the arguments 
needed to go up to Capitol Hill to seek further  either repeal of 
sanctions or amendment of Brownback law to allow some form of 
military cooperation."
"The conventional military sales, transfers of equipment, all that 
will require further steps by Pakistan to allow us to resume that 
kind of relationship."
Asked about specific steps that the US wanted Pakistan to take, 
like the signing of the CTBT, or the rollback of their nuclear 
programme, Inderfurth referred the questioner to the five-point 
charter given by Strobe Talbott which listed signing and 
ratification of the CTBT at number one, followed by a unilateral 
moratorium on fissile material production.
Karl Inderfurth added further that Mr. Sharif had been clearly told 
that "the nature of the President's decision (to lift some 
sanctions) was limited and confined to the IMF package... That this 
is limited, that we need to be able to make further progress to 
provide further assistance. That will require additional steps, 
concrete steps, by Pakistan to address non-proliferation and 
security concerns of the US."
CTBT: On CTBT, Bruce Riedel's remarks were frank. "Both leaders 
reviewed the status of the Pakistan-US talks (on non-
proliferation), underscored the importance of trying to come to 
closure on them. I would not say that major new developments 
occurred there. This was more a status-taking and discussing where 
Secretary Talbott and the Foreign Secretary had already brought 
"The prime minister reaffirmed the commitment that he made first at 
the UN General Assembly and when he met with the President in New 
York. The president reaffirmed our view that more progress was 
needed to be made on these issues before we would be in a position 
to remove all of the sanctions under the Glenn Amendment. The Prime 
Minister and the President reviewed the status of those sanctions."
OSAMA BIN LADEN: Inderfurth's remarks on Osama ben Laden were even 
more candid and direct: "In our view about bin Laden, it is very 
simple, he is a terrorist, he is a murderer, he plans to kill again 
and we want him brought to justice. And that view was made very 
clear to our Pakistani guests...The means to accomplish that are 
several in terms of working with other governments...Pakistan is 
well aware of our views on this.
"Pakistan is well aware of the impact of Osama bin Laden in the 
region, and we have asked Pakistan for its assistance and I think 
that message came through loud and clear to Prime Minister Sharif. 
We do not want to speak for him, or what his government intends to 
do. That is a decision they have to take. But they have heard our 
views loud and clear."
This statement was in clear conflict with what foreign secretary 
Shamshad Ahmed Khan said earlier when he denied that any discussion 
had taken place on Osama bin Laden as according to him, "this was 
not a Pakistan's problem."
Inderfurth said Secretary Albright had told Prime Minister Sharif 
that the US had very serious problems with the Taliban, including 
their treatment of women and girls. "All made it clear that of 
primary importance to the US government is the expulsion of Osama 
bin Laden from Afghanistan so that he can be brought to justice.
"While I don't intend to go into details of what was said about bin 
Laden in the meeting, I think it's fair to say that there was no 
love lost, nor any sympathies expressed for him (bin Laden) in that 
meeting," he said.
KASHMIR: On Kashmir the White House officials made it clear that 
there was no change in the US policy of not accepting any mediatory 
role until the Indians agreed to it, despite Mr. Sharif's repeated 
pleadings that bilateral talks with India had failed and were not 
going anywhere.
Riedel said that before the meeting, "The President made it very 
clear that the US was prepared to do all it can to help, but that 
it is only able to do things in any kind of mediation process if 
both parties want the US to be a player in this. The President 
reaffirmed that, and he indicated that it would need to be made a 
request from both parties for the US to play a mediation role."
F-16S ISSUE: The F-16s issue is the only matter on which some 
progress appears to have been made but there were conflicting 
figures being floated around by the Pakistanis and the US side as 
details of the US-New Zealand agreement became known.
Inderfurth confirmed that the US had proposed some ideas to settle 
the matter before Pakistan actually filed a case to recover the 
While Pakistan Ambassador Riaz Ahmed Khokhar stated on Tuesday that 
Islamabad had received $235 million from the US, Inderfurth gave 
the figure of $157 that had been paid to Islamabad while the 
balance remained $501 million.

Nawaz links signing of test ban treaty to Kashmir issue solution
Shaheen Sehbai

WASHINGTON, Dec 3: Prime Minister Nawaz Sharif declared on Thursday 
that Pakistan would not sign the Comprehensive Test Ban Treaty 
(CTBT) unless all sanctions were removed, the Kashmir issue was 
meaningfully addressed, and all embargoes lifted.
Speaking at the National Press Club in Washington, Mr Sharif said 
no sanctions could force Pakistan to renounce its nuclear 
It was for the first time that Pakistan had linked the resolution 
of the Kashmir issue to the signing of the CTBT in what appeared to 
be an apparent attempt to resist the US pressure to show "concrete 
progress" on the nuclear non-proliferation issue.
Analysts said Pakistan was facing an uneasy situation after the 
blunt US statement on Wednesday that the ball was in Pakistan's 
court as Washington had fulfilled all its commitment and now 
Pakistan had to show additional progress.
The prime minister spoke to a crowded audience packed in a small 
room filled with TV cameras as a handful of Muttahida Qaumi 
Movement supporters walked outside the building on the footpath, 
carrying banners and pictures of Altaf Hussain. Shahbaz Sharif 
waved to the protesters when he left the Press Club building and 
waved the "V" sign to them.
Mr Sharif was asked a number of pointed questions about Pakistan's 
support to the Taliban government and Osama bin Laden but he 
parried most of them saying that Pakistan had cooperated with the 
US on issues of terrorism in the past and would continue to do so 
in future.
"We discussed the extradition of Osama bin Laden with the US 
leaders," Mr Sharif said when asked specifically whether President 
Clinton had asked him to deliver the Saudi millionaire to the US 

Asked whether Pakistan would impose the Taliban-type justice, cut 
hands of thieves, etc, Mr Sharif said Pakistan was a modern, 
progressive and liberal state.
On the CTBT, he said Pakistan supported the treaty but it would not 
sign it under the atmosphere of coercion.
The prime minister was asked about the situation of the press in 
Pakistan and attempts by the government to muzzle it by taking 
administrative steps against major newspaper groups. 
He said he had an impeccable record on maintaining the press 
freedom and if any newspaper had received tax notices, the 
department of tax must be asked about it.
Three military courts start work today
Sarfaraz Ahmed

KARACHI, Dec 4: Three military courts begin functioning in Malir 
Cantonment on Saturday, with the trial of seven people allegedly 
involved in different cases.
According to police sources, the cases pertain to abduction, rape 
and murder, and all the seven to be produced in the military courts 
had been arrested after the imposition of governor's rule on the 
Two of these cases, according to the sources, are against the 
alleged activists of the Muttahida Qaumi Movement and Mohajir Qaumi 
According to a senior police official, all the seven accused had 
been served with charge-sheets 24 hours before their production 
before the military courts.
In the rape case, a girl, who was going to a tuition centre from 
her house in Sharifabad police station area, was allegedly abducted 
and sexually assaulted by five people belonging to the Muttahida 
Qaumi Movement, in December last year. Two of the accused have been 
Another case pertains to killing of a police constable, Mohammed 
Siddiqui, in May this year in the limits of Chakiwara police 
station. Three of the accused have so far been arrested.
Yet another case pertains to the murder of an assistant sub-
inspector, a head constable and a constable in the jurisdiction of 
Ibrahim Haidery police station in June this year. Three people, 
allegedly belonging to the Mohajir Qaumi Movement, were involved in 
the killings. Two of them were arrested.
The Inter Services Public Relations announced on Friday that 
military courts would start functioning in Malir Cantonment on 
According to it, the army has evolved an elaborate system to 
administer justice.
For smooth functioning of the courts, the ISPR said, prosecution 
and trial wings had been set up under experienced senior officers, 
and that all cases would be received by the prosecution wing, which 
would ensure that cases were complete in all respects.
The ISPR said the best officers whose character and integrity were 
beyond reproach, had been made available for the courts. Each court 
would be presided over by a lieutenat colonel, who would have two 
more officers of the rank of major, as members.
During trial, the accused would be afforded full opportunity to 
defend themselves and they would be allowed to hire any defence 
counsel of their choice.
"The accused, if convicted, will be allowed to file an appeal. The 
appellate court will be presided over by a major-general," the ISPR 
said. To begin with, three courts had been established and cases of 
heinous nature, such as kidnapping, gang rape and murder had been 
referred to the courts.
It may be mentioned that the three courts will try cases from 
amongst the 19 finalised by the government for trial.
The sources said each case would be decided in three days, as 
stipulated in the "Pakistan Armed Forces (Acting in aid of the 
civil power) Ordinance, and three days would be allowed for appeal.
Pakistan expresses concern at Indian military exercises

ISLAMABAD, Dec 4: Pakistan, reiterating its concern at the massive 
Indian military exercise across the border, said here on Friday, 
that "such aggressive posturing" can only vitiate the atmosphere 
between the two countries.
"The Indian military exercise comes at a time when the two 
countries are engaged in bilateral dialogue," Foreign Office 
spokesman said here on Friday.
"The exercise sends a negative signal and bodes ill for the 
promotion of an atmosphere of peace, security, confidence and trust 
in the whole of South Asia," he said.
He said, according to reports, Prithvi missiles were a part of the 
sophisticated weaponry which was integrated in the exercise.
The FO spokesman said the flexing of military muscles is, 
"pointless," as Pakistan is fully capable of its defence and 
territorial integrity.
The exercise comes on the heels of a joint manoeuvre by Indian 
army, navy and airforce held on November 17 on the western coast.
On Thursday China also expressed concern about the exercises. An 
Indian army spokesman said on Wednesday the exercises had peaked on 
November 27 and would end on Sunday.
In 1987 first India and then Pakistan carried out large-scale 
military manoeuvres close to their border, raising the spectre of a 
fourth war between them.-APP/dpa/Reuters

Ordinance promulgated: Sales tax rate raised to 15pc
Ikram Hoti

ISLAMABAD, Dec 1: The federal government has raised the rate of 
Sales Tax from 12.5 per cent to 15 per cent with effect from 
December 1, 1998.
An ordinance, to be called Sales Tax (Second Amendment Ordinance, 
1998,) promulgated by the President here on Tuesday, stated that 
the Sales Tax assessees shall pay the tax at 15 per cent from the 
assessment month of December, 1998.
Through the ordinance, the government has also armed itself with 
the powers to further amend the already issued notifications in 
this connection, or modify them for doing away with exemptions 
given to the Sales Tax assesees.
The new rate has also been made applicable to the fixed tax 
assessees who would continue to pay Sales Tax at the standard rate 
which, at present, is 15 per cent.
The fixed sales tax system, it may be recalled, was abolished from 
the current financial year, but some of the assessees, who had been 
given that facility, were still engaged in discussions with the 
government for its resumption.
APP adds: The upward revision in sales tax by 2.5 per cent will 
enable the Central Board of Revenue (CBR) to fetch over Rs6.5 
billion in the rest of seven months (December-June) of the current 
fiscal, 1998-99.
The government agreed to enhance the rate of sales tax from 12.5 
per cent to 15 per cent during the talks recently held with the IMF 
mission to reach an agreement on a bailout package of $5.5 billion.
The enhancement in the ST rate, sources at the CBR said, would 
provide cushion against the shortfall in revenue mainly owing to 
less collection under customs duty.
The sales tax has been increased from 12.5 per cent to 15 per cent 
in case of registered traders. However the ordinance is silent 
regarding the unregistered traders who had to pay 13.5 per cent 
sales tax and it is not clear whether 15 per cent sale tax is flat 
or not for both categories.
The enhancement of sales tax is expected to improve the projected 
ST collection from Rs72 billion to around Rs80 billion during the 
current fiscal year.
Increase in sales tax was described by the revenue circles as 
inevitable, to facilitate the agreement with the IMF for the 
restoration of stalled ESAF.
Increase in sales tax, economic analysts were of the view, would 
escalate the prices, particularly, of those products which were 
within the ambit of sale tax.
Sales tax has been a burning issue and threadbare discussions were 
held between the government and the business community time and 
again during the first five months of the current fiscal year.
One of the main objectives of levying the sales tax, sources 
opined, was to ensure the documentation of the economy which is 
included in the IMF conditionalities, attached to approving soft 
term loan for Pakistan.
Sales tax payers' net is expected to be broadened to 15,000 by June 
1999, sources said adding, during the first quarter of 1998-99, the 
Board was able to collect over Rs8 billion and refund claims were 
allowed worth over Rs6 billion.

New Zealand confirms it will lease 28 F-16s
DAWN Report

WASHINGTON, Dec 2: New Zealand confirmed on Wednesday that it would 
lease the F-16 fighter planes for $6.6 million per plane in a 10-
year deal, leaving Pakistan still looking for the balance of about 
$400 million in the deal. A spokesman for the New Zealand embassy 
told Dawn that Wellington would lease the planes and make the 
payments directly to the US, without any dealings with Pakistan. 

The spokesman, Defence Attache Admiral James Barclay, said the 28 
F-61 planes would be accepted on "as is where is" basis. Experts 
said the US deal with New Zealand and the disclosure by Ambassador 
Riaz Khokhar on Tuesday that Pakistan had already accepted partial 
payments of $235 million out of $658 million it had paid for 
purchase of F-16s, meant that the option for taking the US to the 
court had been surrendered by Pakistan. 

It is still not clear how the US would pay the balance amount to 
Pakistan but President Clinton to a question by a US reporter 
before he began his talks with Nawaz Sharif, said: "We are working 
out this problem with Pakistan." The decision to take the Pakistan 
planes was taken by the cabinet in Wellington on Monday, the 
spokesman said. 

The US officials told the New York Times that New Zealand had 
agreed to lease the 28 F-16 fighters planes on a 10-year 

The revenue collected from this lease contract would be used to pay 
a part of $658 million Pakistan paid for these planes, a 
prestigious and influential newspaper The Washington Post said in 
an analysis here Wednesday. 

The US officials confirmed the arrangement but not the price and 
said many details remained to be worked out, including how much 
money would go directly to Pakistan and whether the New Zealand 
could later upgrade the planes. Pakistan had paid about $658 
million for 28 of the 60 F-16s planes it had ordered when a 
Congressional amendment was triggered in 1990 that suspended all 
direct economic aid and military sales to Pakistan. But Washington 
refused to reimburse Pakistan, since the money was already spent to 
build the planes, and there was a search for nearly a decade to 
find another customer, while the planes remain in storage in the 
Arizona desert.

Railways reorganized to eliminate deficit
Muhammad Ilyas

ISLAMABAD, Dec 2: Pakistan Railways has made arrangements to 
eliminate deficit from its operations from the current financial 
year, thanks to its segregation into four companies, Chairman of 
Railway Board Masud Daher told Dawn here on Wednesday.
He said that the passengers and freight companies, which had 
commenced their separate operations from last September had 
increased their revenues substantially in just three months. In 
1996-97, PR had run a deficit of Rs1.5 billion. Even during the 
first two months of the current fiscal, its deficit had amounted to 
Rs80 million.
The effort was to run PR on commercial lines in order to make it an 
efficient service in two to three years. Railways, he pointed out, 
had been declared an industry so that private sector might come 
forward to invest for its continued development.
In reply to a question, the PR chief expected the four companies 
(one each for passenger wing, freight wing, infrastructure and 
residual) to be registered with the Corporate Law Authority by 

February next. But this would depend on adoption of appropriate 
amendment in the Railways Act by the Parliament.
The railways ministry, meanwhile, was currently engaged in 
resolving various measures pertaining to legal constraints and 
utilizing the services of experienced chartered and cost 
accountants for preparation of financial statements of the four 
companies. One of the important tasks in this connection, he added, 
was the preparation on commercial lines of four separate budget of 
the new entities.
Since their separate operation, the passenger and freight companies 
had already exceeded their revenue targets in the last two months. 
The former had raised its monthly revenues to Rs410 million. This 
was made possible, inter alia, by increasing the frequency of train 
services between Faisalabad and Karachi from alternate days to 
every day. Besides, the ratio of trains starting from their 
originating stations, was 95%.
As regards the service to passengers, he said that at present only 
25% of trains were equipped with lighting and water facilities. The 
remaining 75 per cent would be provided fully with these facilities 
by next June. Three trains running in the Lahore-Narowal section 
had been provided with these facilities. In this connection, 
overhauled passenger wagons were being inducted into the passenger 
service at the rate of 90 a month.
Questioned about the revenue loses of PR, he said that the Federal 
Cabinet had recently decided to abolish free passes for officers in 
BPS 17 to 21 as well as complimentary passes. Henceforth, all the 
officers would have to pay 10 per cent of the fare. Moreover, it 
had been decided that the revenue-giving passengers would have 
priority over the pass-holders (including those paying 10% and 33% 
fare) in the allocation of seats.
To check ticketless travel and other malpractice, he said a special 
campaign had been launched by PR. 
In addition, revamping of reservations, ticketing and sale of 
passenger tickets was also in hand and would be computerized by 
next June so as to obviate the menace of black-marketing and 
ticketless travel.
PR was also losing revenue on account of allotment of stalls. 
Recently, however, under a Federal Cabinet directive, these stalls 
were allotted on the basis of open auction. Consequently, PR had 
netted Rs19 million at Lahore and a few other stations, whereas 
these used to yield only a few thousand rupees in the past.
Talking about the freight company, he said the number of goods 
trains leaving Karachi each day had been raised from 4 to 10 since 
November 1. The number of wagons loaded with goods each day had 
also gone up from 686 wagons to 1066 wagons for transportation of 
petroleum, fertilizer, cement, wheat etc.

Pakistan's credit rating further downgraded

WASHINGTON, Dec 4: Pakistan has met all IMF conditionalities and 
has delivered what it had to, Finance Minister Ishaq Dar announced 
on Thursday as a major credit rating firm further down-graded 
Pakistan following reports of a 13 million dollar default in 
interest payment.
Dar, however, told a special briefing for journalists accompanying 
the prime minister that the default issue had been resolved and the 
payment had been made by Pakistan, thus maintaining its clear 
record of not missing out on any due payment.
Standard and Poor's rating firm lowered Pakistan's long term debt 
from CCC- to CC with a negative outlook after Pakistan failed to 
pay 13 million dollars in interest due Nov 20 on a 300 million 
dollar bond issue. Short-term debt was reaffirmed at C, the firm 
"The negative outlook highlights the highly vulnerable state of 
Pakistan's finances," the firm said. "If the payment ... is not 
made within the grace period, the rating will be lowered to D."
It however said if in the medium term, Pakistan's credit standing 
could improve materially, depending on the terms of any 
rescheduling and, more important, the design and implementation of 
needed structural reforms."
S&P acknowledged, however, that Pakistan has a 10-day grace period 
to make the payment but said it estimated the country had a five-
billion-dollar financing gap in the current fiscal year and that 
its reserves had dwindled to about 400 million dollars.
As news of the default and further down-grading of Pakistan's 
rating broke, Finance Minister Ishaq Dar joined Foreign Minister 
Sartaj Aziz at a briefing to announce that Pakistan had already 
taken care of the 13 million dollar default issue and the payment 
has been made.
Dar said Pakistan would not default on any of its payments any 
further and would also not need any bridge financing before the IMF 
tranche was released after the Board approval in January.
He said the meetings between Prime Minister Nawaz Sharif and IMF 
chief had resulted in the full backing of the IMF for the programme 
agreed earlier in Islamabad. "It is reassuring that the IMF MD had 
backed us even before the Board approval," he said.
He said the Paris Club would be meeting on Dec 10 and once 
clearance was given by the club to reschedule the debt, the IMF 
board would meet in January.
He said: "We have been current with our creditors, and we will 
remain current. We do not need any bridge financing and every 
commitment and due payment within the grace period would be made by 
Pakistan, until the IMF Board approves our programme."
He said speculative issues of devaluation and currency are now 
clear. All prior actions that we had to take had been taken. What 
we had to deliver we have delivered.
He said the IPPs issues had almost been settled. The pending issue 
was three US firms which want to take their case to the private 
committee and that government should withdraw NIT notices.
Dar said these notices will be withdrawn subject to the condition 
that Pakistan will not prejudice its right to go to the court if 

the issue was not settled by the committee. Once the IPP issue was 
resolved, the restoration of investor confidence will follow.

Govt borrows Rs 6.36bn from banks

KARACHI, Dec 3: The government on Thursday borrowed Rs 6.364 
billion from money market through sale of treasury bills. The bills 
were sold by the State Bank on behalf of the government.
Senior bankers told Dawn that SBP sold Rs 6.164 million worth of T-
bills for six months at a weighted average yield of 11.93 per cent 
and Rs 200 million worth of one-year T-bills at 12.99 per cent. 
They said the SBP rejected all the bids worth Rs 5.075 billion 
received for 3-month T-bills.
Bankers said the SBP had received total bids worth Rs 37.609 
billion for T-bills of the three maturities of which bids worth Rs 
6.364 billion were accepted and the remainder was scrapped.
They said the market was fairly liquid at the end of the day with 
an excess liquidity of Rs 7-8 billion. Overnight call rates 
oscillated between 6.0-12.00 per cent.
Bankers said the market might remain liquid during this week as Rs 
13 billion worth of inflow is due on Dec 5 through maturity of the 
treasury bills sold in a previous auction and an open market 

Recovery of Rs9bn: Ittefaq group executive quizzed

LAHORE, Dec 1: An Ittefaq group executive was on Tuesday quizzed by 
counsels representing creditor banks and financial institutions in 
their suit for recovery of Rs9 billion in damages from them for 
first 'engineering' default and then instituting recovery and 
liquidation cases against its three units.
The three units  Ittefaq Foundries, Ittefaq Brothers and Brothers 
Steel  are seeking various amounts totalling Rs9 billion from NBP, 
The federation, the SBP and the defunct PBC have also been 
impleaded as respondents.
Examined by Ittefaq counsel Chaudhry Muzammil Ahmad Khan, the group 
executive, Haroon Pasha, said the respondent banks did not extend 
their cash credit facilities in 1993-94 and then recalled their 
loans. This policy decision forced the group to go into default.
The main thrust of the counsels of the banks, advocates Shams 
Mahmood Mirza, M. Naeem Sehgal and Qaiser Javed Mian, was that the 
three Ittefaq units obtained undue credit facilities due to the 
pressure exerted by Nawaz Sharif as prime minister from 1990 to 
1993. The units were unable to service their heavy debts and as 
they defaulted on consecutive instalments, the mark-up piled up and 
the debt burden increased manifold. In one case, it went up from 
Rs60m to Rs200m.


$350,000 paid in advance to PTCL adviser
Bureau Report

ISLAMABAD, Nov 30: Privatization Commission has made a payment of 
$350,000 to Goldman Sachs - financial advisers for Pakistan 
Telecommunication Limited (PTCL) - on account of mobilization 
advance, Dawn reliably learnt.
The payment of mobilization advance, which the commission had to 
pay to the financial advisers by October 31, was delayed because of 
restriction imposed by the government on the foreign currency 
The commission failing to arrange mobilization advance raised the 
issue at the first meeting of privatization board. Prime Minister 
Nawaz Sharif at the board's meeting gave the approval of raising 
the amount from the open market.
However the commission later asked the ministry of finance to help 
it in raising the foreign currency from the open market.
"Part of the payment has been arranged by us and a part of it was 
provided by the finance ministry," said an official at the 
commission. "We have made the payment and now we expect the 
financial advisers to resume due diligence with in this week," he 
The financial advisers have chalked out a comprehensive marketing 
programme including road shows and seminars to generate maximum 
investors interest in the sale of PTCL, he added.
Apart from arranging the road shows and seminars the financial 
advisers would also carry out a demand estimation study to appraise 
exact expansion potential of telecommunication net work. At present 
the PTCL network is spread over 3.58 million lines all over the 
country. No such study to evaluate the exact expansion potential 
has been carried out, said the official. The demand estimation 
study, he said, would be of a great help in the privatization of 
Goldman Sacks according to the agreement has to complete the 
financial close and the transaction of the PTCL to an strategic 
investor by the end of June 1999. The Commission for the whole 
project has to pay a sum of $3.65 million.
"It is a milestone arrangement," the commission would make payments 
with the progress of work done by the financial advisor, he added.
Pakistan Telecommunication Limited as per the Pakistan 
Telecommunication Act has the monopoly by the end of 2002. The 
delay in the privatization might reflect adversely in the price as 
the monopoly period was shrinking with each passing day.
The previous government through a public offering had off loaded 12 
per cent shares of the company. The remaining 98 per cent shares 
are still with the government out of which it plans to sell 26 per 
cent to an strategic investors along with the transfer of 
Security for loans: SBP extends liquidation date of FCY deposits

LAHORE, Nov 30: The State Bank of Pakistan has extended the date 
for liquidation of the frozen currency deposits as security for 
loans till December 15 as desired by a three-member bench of the 
Lahore High Court on November 27.
The reconstituted bench for hearing of petitions and appeals of the 
aggrieved foreign currency account holders fixed Dec 3 for 
commencing the day-to-day proceedings.
As regards interim relief, it said: "We find that there were some 
arrangements made by the court with the consensus of the parties 
whereunder the impugned SBP circular (No 23 of July 2) was not 
enforced qua the petitioners. We hope the arrangements will 
continue till the next date of hearing when we would like to pass 
an order on the point."
Appearing for the SBP, Advocate Abid Hasan Minto undertook to 
convey the court observation to the bank. Similar extensions were 
earlier granted by the SBP for one-month periods.
The bench consists of Justice Mian Allah Nawaz, Justice Amir Alam 
Khan and Justice Karamat Nazir Bhandari.

'More incentives needed to boost gold exports'
By Our Reporter

KARACHI, Nov 28: The new incentives to gold exporters given by the 
government may not bring desired results as the jewellers feel that 
there is still a lot to be offered in order to fully utilize the 
Chairman, All Pakistan Gem Merchants and Jewellers Association 
(APGMJA), Mehmood Chowksi looked somewhat satisfied that there was 
little encouragement from the government and termed the package as 
"something is better than nothing" under the present circumstances.
According to him, Pakistan's exports of gem and jewellery increased 
to $15 million in 1997-98 from $9.5 million in 1996-97.
"We can increase the exports to $100 million in coming years if our 
suggestions are fully approved by the government," he said.
The association has proposed to the government to make the import 
of gold free for every one but the new package insists for 
registration of exporters by paying a fix deposit of $10,000.
According to Chairman, GST Action Committee, APGMJA, Saeed Qureishi 
the decision to allow exports will benefit only those who are 
exporters and we cannot expect good results until gold import is 
allowed freely like in India.
He said the government must now ensure one-window operation and 
proper implementation of the new package so that some headway can 
be made.
He said he has informed the finance and commerce ministers that the 
association had not received the notification regarding the new 
He, however, hoped that import of gold would increase as 
previously, the market was dependent on three big importers who 
were making artificial shortage to secure higher prices.
Chowksi also urged the government to allow the use of gold stored 
with the central bank like in India. According to the association, 
gold worth Rs70 billion is available with the State Bank and if one 

third is given to the industry on rent, the export of jewellery can 
be increased within three-six months.
State Bank may be advised to loan the gold to the exporters through 
designated nationalized banks.

Freight issue: No early end to exporters' woes
Mohiuddin Aazim

KARACHI, Dec 1: The State Bank may allow outward remittance of $22 
million worth of stuck-up shipping freight from Pakistan from 
Wednesday on first come first serve basis. But sources in the 
shipping sector say it would not mean a simultaneous withdrawal of 
the Karamahom decision that refrained shipping lines from accepting 
freight for exports and imports booked from Pakistan.
Sources close to SBP told Dawn on Tuesday that some 675 cases of 
shipping freight remittances worth $22 million had piled up till 
Sept 30, 1998 which would be cleared on serial basis.
They said these cases had almost been serialized adding that the 
process of clearing them might start from Wednesday. They said all 
cases that fulfilled necessary formalities would be processed 
within a week or a little more than that.
The SBP was supposed to start entertaining these cases from Tuesday 
under an informal agreement reached between SBP authorities and 
newly-inducted chief of Export Promotion Bureau Wajid Jawwad but it 
did not come to pass.
"The SBP did not entertain a single case of freight remittance on 
Tuesday," a spokesman for All-Pakistan Shipping Association Farrukh 
Qaiser told Dawn on telephone.
The representatives of shipping lines had assured EPB chairman on 
Monday that they would strongly recommend to their principal 
offices to withdraw their decision of not entertaining export and 
import cargo only on C&F basis from Pakistan if their outstanding 
shipping freight up to Sept 30 is allowed to be repatriated abroad 
from Dec 1. The Karamahom Conference issued a circular in mid-
November announcing that from Dec 1, 1998 its member shipping lines 
would accept freight for imports and exports booked from Pakistan 
not in Pak rupee but in a currency acceptable to them. This meant 
that the shipping lines would not be accepting shipments on the 
basis of C&Fthey would only be accepting shipments on FoB basis 
This forced the exporters to spend sleepless nights as most of them 
feared loss of business because selling goods on FoB basis in a 
highly competitive world market has lately become next to 
impossible. The worried exporters rushed to EPB for rescueand EPB 
chief managed to win a word from SBP authorities on clearance of 
backlog of stuck-up freight remittances up to Sept 30.
Sources close to SBP may clearance of this backlog may start from 
Wednesday but the question is whether it would mean an immediate 
lifting of the Karamahom circular. The answer is No.
"It might take some time," said Farrukh Qaiser. He said once the 
SBP began allowing remittance of stuck-up freight the local 

chairman of Karamahomthe state-run PNSC would only recommend to 
its headquarters in London that the circular should be withdrawn. 
"I cannot say how early the Karamahom Conference would respond to 
such a recommendation."
Sources in the shipping sector say the conference might not 
withdraw its circular until they see "a consistent improvement in 
the current situation" which may take at least two weeks from now. 
Besides it is not clear now when the SBP will start allowing 
freight remittances stuck-up during October and November.
Farrukh Qaiser said that the total amount of unremitted shipping 
freight up to Nov 30 is no less than $45 million. This means that 
there is no word yet on cases of unremitted freight worth some $23 
He said he had suggested to the SBP that the shipping companies 
should be permitted to accept freight in dollars from their clients 
in Pakistan. He said the SBP officials were yet to respond to it.

Cement makers decline to bring prices down

LAHORE, Dec 1: Cement manufacturers have ruled out the possibility 
to lower cement price from Rs 240 per bag. According to the 
Pakistan Cement Manufacturers Association here, the industrialists 
have informed the Monopoly Control Authority that under the present 
circumstances the cement rates could not be cut down.
The MCA wants manufacturers to fix the cement cost at around Rs 175 
per bag. It feels that the cement producers have formed a cartel to 
steer market forces in their favour which practice the authority 
believes is not warranted under the law. 
"The association has informed the MCA about its mind as the 
manufacturers are ready to face any eventuality", a cement 
manufacturer told Dawn here on Tuesday. 
The association claims that the manufacturers have experienced 
losses to the tune of about Rs 2 billion in the last 18 months due 
to high rate of excise duty, sales tax and other levies. 
"Even at the present rate (Rs 240 per bag) the manufacturers are 
facing a net loss of about Rs 10 per bag", it said in a fax message 
sent to the federal government. 
In the meantime, sources said, the industrialists were pressing the 
federal government to announce for them certain incentives enabling 
them to export their excessive stocks. 
"It appears as if the whole war of words between the manufacturers 
and the MCA which is going on for the last about six weeks is to 
decide the fate of the cement which has been produced in excess of 
the domestic demand and which the businessmen want to bargain 
against the soared cement price for shipment", sources noted. 
But the federal government, they said, was firm that no more 
incentives would be given to the cement industry as it was already 
enjoying some relief against some other major industries in terms 
of the rates of different levies.

Business facing problems on export proceeds
Parvaiz Ishfaq Rana

KARACHI, Dec 3: Exporters complain that they are facing problems 
with banks despite the State Bank's directive on the delayed 
repatriation of export proceeds for which the last date was 
extended from Nov 30 to Dec 31, '98 by the finance minister.
'My bank has threatened to declare me a defaulter for not 
repatriating the delayed export proceeds up to Nov 30 and has 
stopped refinance facility which is going to effect the liquidity 
badly needed for fulfilling export commitments,' said a leading 
exporter of textiles.
Official claims that around $650 million are stuck up in over due 
export proceeds but exporters say that only $100 million fall in 
this category and are mostly for reasons beyond the control of 
Exporters maintain that the banks are reluctant to listen to them 
in absence of written directives from the SBP and say they will 
continue to consider Nov 30 as the over due date for repatriation 
of export proceeds.
The Council of Textile Association (CTA) in a written complaint to 
deputy governor SBP drew his attention towards Nov 27 meeting, 
chaired by Finance Minister Ishaque Dar.
It pointed out that it was decided that the application of the SBP 
circular No 48, governing delayed realisation of export proceeds, 
will remain suspended up to Dec 15,1998, which was subsequently 
further extended up to Dec 31, as declared by the finance minister 
himself during the 'Leather Show' where prime minister was the 
chief guest.
The CTA further stated that it has been brought to its notice by 
several exporters that their banks are creating problems in 
refinance, imposing penal interest and threatening them to be 
declared defaulters.
Maqsood Ismail, acting president FPCCI contacted SBP director on 
Exchange Control, Mahfuz Alam in this regard to get matters 
A copy the circular made available by FPCCI to Dawn stated that all 
other instructions contained in F.E Circular No 48 dated Oct 22, 
'98 except those contained in para (f), shall remain suspended till 
Dec 31, '98. The para (f) of circular 48 only pertains to 
submission by the banks a monthly report on overdue export bills.
Exporters said it is difficult to understand why banks are 
harassing the exporters at this time of the year when they have to 
utilize the textile quota before Dec 31, 1998.

Stocks lose 63 points, break barrier of 1,000

KARACHI, Dec 4: The KSE 100-share index on Friday broke the 
psychological barrier of 1,000 points as investors sold in a bit 
haste long positions built-up ahead of the prime minister's US 
visit apparently disappointed by conflicting news about the success 

of his talks with President Clinton. It fell 63 points or about 
five per cent at 979.04 points.
Massive selling in Hub-Power, PTCL and some other blue chips led 
the market decline amid fears of bleak prospects of the IMF aid. 
The news of postponement of IMF meeting drove KSE index below its 
base level of 1,000 points for the fourth time during the current 
There was confusion in the rings as many were not prepared to 
entertain the pessimistic idea about the outcome of the prime 
minister's visit and after early pause panic selling followed, 
notably from jobbers and bargain-hunters.
"A decline of 63 points or over 5 per cent in a single session 
reflects investor's perception about the long-term economic outlook 
and terribly weak fundamentals," analysts at the KASB said.
However, the nervous selling could be psychological as investors 
have overreacted to the prime minister's US visit and its positive 
outcome but the ground realities tell a different story, they 
"Investors are expected to be back in the rings led by foreign ones 
after more details about the outcome of talks reaches the market," 
they hoped.
The KSE 100-share was last quoted at 979.04, breaching the 
psychological barrier of 1,000 points, as compared to 1,042.21 a 
day earlier as losers forced strong lead over the gainers at 70 to 
15, with 14 shares holding on to the last levels, out of the 99 
Massive speculative buying ahead of the prime minister's US visit 
took place on hopes that he will come back home with a bag 'full of 
aid' but investors were disappointed as there was no word on the 
issue," they added.
Floor brokers said there might be wider understanding between the 
prime minister and President Clinton about each other's position 
but investors were hoping an instant major breakthrough in the 
prevailing thaw on the aid front and post-nuclear test economic 
"What seems to have further accentuated the prevailing apathy was 
the news of postponement of the IMF meeting, due on Dec 10, which 
was to approve the bail-out package of $5.5 billion agreed late 
last month in Islamabad parleys," they added.
The selling in Hub-Power was largely attributed to its payment 
dispute with WAPDA, which has reduced its monthly payment from Rs 
850 million to Rs 720 million against energy bill and the former's 
legal action, they said. PTCL, another pivotal, also came in for 
heavy selling on news of lower interim profits and having about 33 
per cent weightage in the KSE 100-share index, it drove below its 
face value.
Otsuka Pakistan and Millat Tractors were leading among the gainers, 
rising by one rupee to Rs 2.00 at Rs 8.00 and Rs 55.00. Losers were 
led by Lever Brothers, PSO and Burshane Pakistan, falling by Rs 
5.00 to Rs 25.00, with Burshane being the top loser.
Other prominent losers included MCB, Adamjee Insurance, Fazal 
Textiles, Bolan Casting, PTCL, Fauji Fertilizer, ICI Pakistan, 
Dewan Salman and Shell Pakistan, which suffered fall ranging from 
Rs 1.45 to Rs 9.00.
Owing to Shab-i-Barat, trading was allowed only for the morning 
session but volume figure was maintained at the overnight level of 
90 million shares due to heavy selling in the pivotals.
The most active list was topped by Hub-Power, off Rs 1.30 at Rs 
13.90 on 40 million shares, followed by PTCL, lower Rs 2.00 at Rs 
20.95 on 18 million shares, Dhan Fibre, unchanged at Rs 2.60 on 5 
million shares, PSO, off Rs 5.60 at Rs 75.50 on 4 million shares, 
Engro Chemical, off 45 paisa at Rs 72.55 also on 4 million shares.
Other actively traded shares were led by Fauji Fertilizer, off Rs 
2.65 on 3.256 million shares, followed by ICI Pakistan, off Rs 1.40 
on 2.823 million shares, Dewan Salman, Rs 1.40 on 1.717 million 
shares, KESC, easy Rs 1.15 on 2.918 million shares, Sui Northern, 
lower 70 paisa on 1.280 million shares, and MCB, off Rs 1.45 on 
1.082 million shares.
DEFAULTING COMPANIES: National Motors came in for active selling 
and was quoted sharply lower, by Rs 3.00 from Rs 6.00 to Rs 3.00 on 
500 shares, followed by Al-Qadir Textiles, steady 10 paisa also on 
BOARD MEETINGS: Pakistan Engineering and Nina Industries on Dec 5, 
Dhan Fibres, Chakwal Cement, AKD Securities and Safe Deposits 
Company and Lucky Cement, Dec 7, Nimit Resins, Sarhad Cigarette 
Industries, Adil Polypropylene Products, Universal Leather and 
Footwear Industries and Al-Khair Gadoon, Dec 8.
DIVIDEND: Shezan International, cash 35 per cent, and Ismail 
Industries, 15 per cent, for the year ended June 30, 1998.

Back to the top
The city of Karachi
Ardeshir Cowasjee

GO TO the municipal office, or to the Civic Centre, and try to 
impress upon the men there holding high offices that under any 
circumstance it is a crime to desecrate a public park or a 
vehicular road, and hand it over for private benefit, and you will 
meet with blank expressions and empty looks.
You wonder if these men are made of wood from the navel upwards or 
are merely routinely corrupt. Even after giving them the benefit of 
the doubt, you conclude that routine prevails.
Descending the stairs of the municipal office you pass two marble 
plaques, neatly embossed (rather than engraved) commemorating "the 
consecration ceremony of the building on January 17, 1932, the 
presence of the citizens of Karachi. May all be blessed in this 
city." You wonder how many who have passed by have understood the 
message and its import.
The other day, by chance I came across a copy of a speech delivered 
over 70 years ago by a City Father of Philadelphia. It has spirit. 
It marches.
"Back 144 years ago, this great nation, the United States of 
America, was born in my city of Philadelphia, and so it is quite 
natural that a city having such a historical record should have 
that strong American spirit that has not only made it the greatest 
industrial centre in this country, but also one of the largest and 
the most beautiful cities in the whole world.
"Philadelphia has a population close to two millions of people, and 
our city has an area that is equal to the combined size of 
Milwaukee and Boston, Paris and Berlin, and out of our 130 square 
miles of territory we have given up nearly 8,000 acres of our best 
land for beautiful parks, squares and boulevards, so that our 
people would have the proper places for recreation and pleasure, 
and the right kind of environment that belongs to every decent 
"Philadelphia, friends, is not only a large, clean and beautiful 
city, but it is also known everywhere as the great workshop of the 
world, and the reason it is called the workshop of the world is 
because we have a vast army of over 400,000 people employed in 
9,200 industrial establishments that turn out one hundred thousand 
dollars worth of useful commodities every ten minutes of the 
working day, and according to a well known statistician, there is 
no city in this country that equals Philadelphia in the production 
of woolen goods, leather goods, knit goods, textiles, felt hats, 
hardware, tools, storage batteries, steel ships and a great many 
other things. We build a railroad locomotive every two hours day 
and night, and more than one half the people in this great country 
ride in street cars made in the city of Philadelphia.
"We manufacture a thousand cigars every minute and last year, in 
our 115 hosiery mills, we made two pairs of stockings for every 
man, woman and child in this country. We make more carpets and rugs 
than all of Great Britain and Ireland combined, and, in fact, our 
total commercial and industrial business is so stupendous that our 
banks clearing last year, amounting to thirty-seven billions of 
dollars, would have paid for every Liberty Bond in the entire 
"But, friends, while we are very proud of our wonderful industrial 
progress, and while we are also very proud of being one of the 
largest medical, art and educational centres in this country, yet, 
we feel a still greater pride in the fact that we have more 
individual homes in the City of Philadelphia than there are in any 
other city in the whole world. In Philadelphia we have 397,000 
separate homes, and if these homes were placed on twenty-five foot 
lots, side by side, in one single row, that row would reach all the 
way from Philadelphia clear through to this Convention Hall, at 
Kansas City, and then on to Denver, a distance of 1,881 miles.
"But what I want to call your special attention to is the 
significance of the fact that tens of thousands of these homes are 
owned and occupied by the working people of our city, and when a 
man owns the ground upon which he stands and the roof over his 
head, there is no argument ever presented that would infect that 
man with those imported diseases, known as Socialism and 
"Philadelphia is no fertile soil for European anarchy, because our 
homes, our educational institutions and our gigantic industry have 
been produced by that true American spirit that was born in our 
city, and is a heritage from our forefathers. Philadelphia is the 
mother city of this great country, and the very fountain-head of 
American liberty. It is the city where the first American flag was 
made; it is the city where the first Congress of the United States 
met; it is the city where the Declaration of Independence was 
signed; it is the city where that best loved relic in America, the 
Liberty Bell, has inspired tens of thousands of our men, women and 
children, so that we believe we have a sacred mission, which is not 
to worship the golden calf, but to spread the American spirit, and 
to keep the fires of freedom burning, so that with God's 
permission, the Government of Washington, Lincoln and Theodore 
Roosevelt may be an inspiration to all humanity."
The Karachi municipality was established in 1852, almost 150 years 
ago. Its ex-officio president was the Commissioner of Sindh, that 
able administrator Sir Henry Bartle Edward Frere, assisted by a 
secretary who was paid the grand sum of Rs 50 per month. The 
secretary's assistant, a native of Karachi, was described as 'an 
English-knowing clerk' who in turn was assisted by a munshi, all of 
whom had the services of three peons. With the passage of time it 
grew and by 1918 had assumed proper responsibility for the affairs 
of the city, with representatives on its Board of a large cross-
section of Karachi's residents, both British and Indian.
It was in 1918 that Jamshed Nusserwanjee Mehta was elected a 
councillor, which he remained until 1922, when he was unanimously 
elected to succeed his senior Ghulam Ali Chagla as President of the 
Council. He was re-elected year after year, eventually becoming the 
first mayor of the city in 1933, when the Karachi Municipal 
Corporation was formed. On being elected mayor, Jamshed made it a 
rule that mayoral elections were to be held annually, and that no 
candidate could serve for more than one term at a time. When 
Jamshed stepped down in 1934, he reverted to his councillorship, 
finally retiring from public office in 1937.
The second mayor of Karachi, the great lawyer, Tikamdas Wadhumal 
(mentor of Dingomal Narayangsingh Ramchandani), had been the 
municipality's honorary legal adviser for many years. He was 
followed by Kazi Khuda Buksh, Khan Bahadur Ardeshir Hormusji Mama 
(the founder of Mama Parsi Girls High School), Durgadas Advani, 
Hatim Alvi, Rustom Khurshedjee Sidhwa, Lalji Melhrotra, Mohammad 
Hashim Gazdar, Sohrab Kawasjee Hormusjee Katrak, Shambonath Mulraj, 
Yousuf Haroon, Manuel Misquita, Vishramdas Devandas and Mohammad 
Ahson, as mayor when Pakistan came into being.
The foundations of the corporate body were laid by Jamshed, and he 
conceived its majestic building. Sir Montagu de Pomeroy Webb, doyen 
of Karachi's British community, on Jamshed's retirement recorded: 
"I consider that Jamshed has done greater and better work for 
Karachi  for its citizens and the people of Sindh  than any other 
individual private citizen of this capital whom I can remember. His 
sacrifices of time, money, strength and peace of mind have been 
unequalled and wholly admirable. The city owes him an immeasurable 
debt of gratitude which I hope that each and every community will 
ungrudgingly recognize."
Coming to the present, the city is fortunate in having, by 
accident, two good bureaucrats  Allahrakhayo Aasi as director-
general of the Karachi Development Authority, and Syed Arshad Ali 
as administrator of the Karachi Municipal Corporation. They and a 
few of their officers genuinely wish to do good by the city, but as 
must be expected, the corrupt in their organization, fed by the 
builders' mafia and the land grabbers and desecrators, impede them 
at every step. The corrupt include many of the incompetent legal 
advisers of these bodies who have well entrenched themselves (the 
KMC man has been there for 22 years).
Their latest ruse is to encourage the builders to file dubious 
'contempt of court' applications against the correctly acting 
officers, engineering the issuance of notices for personal 
attendance and then getting the cases adjourned week after week. 
Some judges tend not to excuse personal absence and the officers 
have to wait in the corridors each day the case is listed. This 
further stifles remedial action while illegality rises, swiftly, 
brick by brick.
"May all be blessed in this city."

Snatching back our rights
Irfan Husain

A COUPLE of years ago, an English friend asked me what I thought 
were the defining characteristics of Pakistanis. At that time, I 
could not think of any that set us apart from other nationalities. 
But since then, I have thought often and hard about this question, 
and have developed certain ideas and views that I would like to 
share with readers.
Above all, we are a pushy, impatient people who simply can't wait 
whether it is at traffic signals, queues at airport check-in 
counters or for our turn on a waiting list for telephones, 
electricity or gas.
Even when there is no advantage in jumping the queue, you will find 
Pakistanis jostling their way forward. For example, instead of 
waiting their turn to get a boarding card, many passengers will 
instinctively head for the counter, disregarding all the others who 
have been patiently waiting in line. They seem to forget that their 
plane will (hopefully) take off at the scheduled time irrespective 
of when they reach the departure lounge. And after the plane has 
landed and is taxing towards the terminal, these same jumpy types 
will stand up and retrieve their oversized hand luggage from the 
overhead racks  despite repeated announcements to stay seated.
But these same people will stand meekly in line at Heathrow or 
Dubai and will stay seated if a white airhostess sternly insists 
that they wait until the aircraft has come to a complete halt. 
Indeed, it has always fascinated me to observe how the behaviour 
pattern of my countrymen changes when they are abroad and on their 
own. Of course, Pakistanis are just as obnoxious abroad when they 
travel in large herds, but are quite tame singly or in pairs.
Far too often, very respectable and highly educated people will be 
seen jumping the queue in Karachi when they wouldn't dream of doing 
such a thing in London. So what is it about our environment that 
encourages such anarchic behaviour? I suspect that the example set 
by people at the very top is the cause. The elites are unused to 
waiting, and are emulated by those below them. All of us are 
familiar with the sight of flunkies going behind the PIA counters 
to get boarding cards for the best seats for their masters. Lesser 
mortals then try to muscle in ahead of the rest. And so it goes.
Having established that impatience is a typically Pakistani trait, 
we are faced with a paradox: how to explain the bovine placidity 
and endless patience displayed by our people when faced with the 
plethora of ills and shortages that plague our society? Why do they 
put up with a creaking infrastructure, a collapsing educational 
system, the shocking venality of our leaders and the corruption and 
incompetence of our bureaucracy?
Why don't they go on a rampage against crushing prices and the 
unavailability of the most basic commodities and services? Why in 
God's name don't they rebel against those responsible for their 
sub-human living conditions, the widespread unemployment and the 
nonexistent medical facilities for the poor?
This apathy is hard to reconcile with the aggression we observe 
every day on the streets, at the railway stations and in most 
public places in Pakistan. Or take large dinner parties as another 
example: guests with ample girths in no obvious danger of 
starvation will be seen pushing their way to the tables, stacking 
their plates with huge helpings and shovelling the food into their 
mouths as though this was their last meal. Although they are hardly 
the types revolutionary armies are composed of, one wonders why 
they put up with the power breakdowns, the pot-holed roads and the 
filthy water that flows from our taps when we are lucky?
The answer again lies in the attitude of the educated elite in 
Pakistan. Since they can afford to insulate themselves from much of 
the nastiness that makes life unbearable for so many, they are not 
moved to protest. On the lower rungs of the social ladder, people 
are so accustomed to being shafted by the state that like prisoners 
in a penitentiary, they take whatever is thrown their way by their 
Those who refuse to put up with it join extremist groups and gangs. 
Indeed, what has been happening in Karachi for years can (and 
should) be seen as an unfinished rebellion against the state. It 
has taken on criminal overtones, but then uprisings against the 
status quo are seldom orderly affairs. Had the MQM been able to 
transcend its ethnic appeal and origins, it might well have struck 
a more responsive chord in other parts of the country.
If things are to change in Pakistan, we need more aggression and 
impatience rather than less, but directed against the 
representatives of the state, and not against other citizens. The 
problem is that the natural leaders of such a grassroots movement 
lead fairly comfortable lives, and are therefore not motivated to 
take on the state. The major political parties are now agents and 
supporters of the status quo and can therefore not provide the kind 
of leadership that is required.
Change can only come about if we can exert pressure on the state 
and its organs. Currently, this is taking the form of sporadic 
violence and critical articles in the press. The former only 
provides the state with justification to strengthen its repressive 
machinery and laws, while the latter is easily ignored or brushed 
aside. But if a groundswell is to build, ordinary people must make 
their dissatisfaction known emphatically and loudly to those 
For instance, if enough consumers bombard the home phones of the 
KESC senior management when there is a power shutdown, it might 
make them aware of the suffering of their customers. Ditto for all 
the other utilities. Similarly, if candidates asking for votes are 
grilled about their performance and not about promises, we may see 
them do more once they get to the assemblies.
Ultimately, we do have it in our power to change the status quo, 
but we must assert ourselves to make a difference. Rights are never 
given; they have to be snatched. So if we live up to our natural 
impatience and aggression in a constructive way, we may finally get 

Beyond the bailout
Sultan Ahmed

THE IMF has given financial breathing space to Pakistan for the 
time being by agreeing to a bail-out package of 5.5 billion 
dollars, inclusive of rescheduling repayment of external loans 
worth 3.5 billion dollars.
That has been made possible by President Clinton who suspended some 
of the sanctions, imposed in the wake of Pakistan's May nuclear 
tests, after US Congress gave him the authority to do so for a year 
within the scope of America's strong anti-nuclear proliferation 
policy. Meanwhile, Congress has come up with tough conditionalities 
for the IMF while approving 18 billion dollars which the IMF had 
sought to augment its depleting financial resources for arresting 
the "contagion" from one country to another in an economically 
destabilised world.
Those in Pakistan who call our nuclear capability as the Islamic 
bomb or describe it jubilantly as the only Muslim country with the 
proven bomb, should not ignore the fact this is not a development 
which Israel relishes, and Israel, which has strategic cooperation 
with India, has not concealed its distaste for Pakistan's nuclear 
capability. The Zionist lobby in the US, which has a strong 
influence on both houses of Congress, can be expected to keep a 
sharp eye on Pakistan's nuclear pursuits and exert pressure on 
President Clinton and Congress to restrain Pakistan from expanding 
its nuclear capability further.
While President Clinton and the IMF have provided breathing space 
to Pakistan for a year, the country still faces other severe 
economic problems. The external debt of 32 to 34 billion dollars 
keeps on swelling as we continue to devalue the rupee from time to 
time. The government has first to mobilise the rupees through 
taxes, convert them into dollars and repay the loans. In addition, 
there is the domestic debt of the government which by June 30 last 
had risen to Rs 1,161 billion, and that calls for a debt servicing 
cost of Rs 164.5 billion while the debt servicing cost of foreign 
loans is only Rs. 42 billion out of the total debt servicing cost 
this year of Rs 275.6 billion, including repayment of loans for Rs 
69 billion. Total national debt was recently stated to be Rs 2,150 
billion. In fact the total seems to be rising fast following the 
heavy borrowing of the government and the resort to devaluation of 
the rupee, and more of it to come soon despite Mr Ishaq Dar's 
It is a long way before the high interest rates can come down and 
the government could borrow at cheaper rates than 16 to 18 per 
cent. High inflation despite the official denial, heavy borrowing 
by the government and inability of the banks to recover much of the 
defaulted loan repayments stand in the way of interest rates coming 
down soon.
Pakistan has other problems like arresting the declining exports 
and falling revenues and reducing the large deficits on both 
scores. It is tough to export more in a hostile or unfavourable 
export environment. The Export Promotion Bureau accepts many of the 
reasons advanced by exporters of textile made-ups for the 13 per 
cent fall in their exports in the first four months of this 
financial year. They are currency turmoil in East Asia, decline in 
the rupee value, and dumping measures and high cost of inputs in 
Pakistan. Cotton prices shot up at home and made textile fabrics 
and other made-ups more costly. While India has come up with a 5.5 
billion dollar textile package to strengthen its export sector, 
Pakistan is not helping the textile exporters in the futures market 
by not ensuring cotton deliveries to the mills on the basis of 
prices agreed in advance.
Now we are told that six ginning factories in Sindh have closed 
down because of heavy losses. They had bought cotton at high prices 
and sold at low prices as prices fell. And the cotton we export get 
lower prices because of the admixture of other elements. We have a 
singular capacity to add to our miseries and getting far less for 
doing far more. All that may be a part of the under-development but 
in a world in which many developing countries have shed their old 
habits and weaknesses and become industrial states, there is no 
reason why Pakistan cannot do the same.
It is time the agriculturists, businessmen and industrialists gave 
up their old habit of seeking mere reliefs and concessions from the 
government and contributing little, in return, to the development 
of the country. Now that the controls on trade and industry have 
eased substantially, they ought to show greater enterprise. But the 
requisite effort is not forthcoming. The manufacturers still have 
their eyes on large profits instead of seeking profits through 
larger turnover. And the government is slow in reaching decisions, 
and usually comes up with half measures.
The new chief of the Central Board of Revenues Mr Iqbal Farid has 
called for revenue collection by his officers on "war footing" to 
fulfil not the reduced revenue target but the old target of Rs 
354.5 billion. That need not mean that the proverbial corruption in 
the departments would be given up on a war footing and virtual 
doubling of revenues would take place on that score alone. If 
instead the taxation officers step up the heat on the formal sector 
indiscriminately that could deter the economic revival and 
industrial recovery.
Prime Minister Nawaz Sharif should know the problem better. While 
he presented awards for the best performing companies in terms of 
profit to share holders in 1997, he agreed with the chairman of the 
Karachi Stock Exchange Mr Yasin Lakhani that companies which did 
not pay taxes and give fair dividend to the share-holders should be 
blacklisted. Some of the members of the KSE sitting there asked 
each other how many of the 30 companies in the Ittefaq Group had 
given good dividend to their minority or small share-holders. They 
could not recall any despite the fact the Ittefaq Group of 
companies are very well managed and the Management Association of 
Pakistan had recently given an ward to one of the companies for its 
managerial excellence.
At a time when foreign investment in Pakistan has become a major 
issue, particularly investment in the power sector, look what China 
has done! In the last 20 years it has absorbed 360 billion dollars 
of foreign investment, including direct foreign investment of 200 
billion dollars. It is only second to the US in the world in the 
quantum of foreign investment.
By the end of 1997 China had approved 314,533 foreign-funded 
companies with contracted foreign capital of 545 billion dollars 
and had actually used 242 billion. As a result of the industrial 
expansion, China's export-import volume in 1997 reached 325 billion 
compared to Pakistan's under 20 billion dollar performance. China 
has foreign exchange reserves of 140 billion dollars  after it 
dropped from 160 billion dollars in June  compared to Pakistan's 
425 million dollars. And yet China insists it is a developing 
country with many major economic problems.
Compared to that, foreign investment in Pakistan, including re-
investment, by the end of 1996 was under eight billion dollars. And 
that too because foreign investment in power production sector went 
up sharply in recent years, and that has become a major 
controversial issue now.
The quantum of external assistance to Pakistan in recent years has 
been equally low. While the IMF has come up with a package of only 
5.5 billion dollars for Pakistan, to Brazil it has advanced 41 
billion dollars for three years. Out of that, 37 billion dollars 
could be available within 12 months if needed, says the managing 
director of IMF Michel Camdessus. Our first tranch, according to 
our expectations, is to be 500 million dollars but indications from 
the IMF is that it may be 250 million dollars.
Evidently we have to do a great deal more to develop the country 
fast. We must develop agriculture in which, too, we have a large 
deficit. Agriculture minister Lalika is right in wanting to give 
farm loans of Rs 60 billion next year against the current year's Rs 
40 billion. But equally important is its proper use and regular 
recovery instead of the richer among the big farmers grabbing too 
much of that and returning too little, while not using enough of 
that on their farms plagued by a host of ills.
It is interesting to note that mega-mergers in the world are 
becoming common. Exxon with a market capitalisation of 181 billion 
dollars and Mobil with 66 billion dollars are to merge to become a 
company with a market capitalization of 247 billion, while Exxon is 
already the largest company in the world on the basis of revenues 
of 182 billion dollars, followed by General Motors and Ford Motors.
In Europe the expanding Deutche Bank of Germany is taking over 
Bankers Trust by paying 10.1 billion dollars to create the world's 
largest bank in terms of assets. Simultaneously the chief executive 
of Barclays Bank Martin Taylor has resigned because profits will 
fall by 8 per cent this year.
An here in Pakistan, with the kind of political set up we have and 
public institutions being too weak, we are finding it tough to 
break out of the small but hard shell. But individuals and 
institutions have to try hard to achieve what we must without fail.

Amjad Khan rises to No.15 in world squash ranking

KARACHI, Dec 1: Ever-improving Amjad Khan, who last month won the 
Pakistan Open, has gone up to no 15 in the world squash while 
record eight time world champion Jansher Khan has further slipped 
from six to eight in the PSA December rankings announced on 
Jansher Khan, who last his number one ranking in February this year 
to Scotland s Peter Nicol who remains at the top,had pulled out 
from a good number of tournaments following his knees surgery in 
April and also because of goring problem he suffered at Hong Kong 
Peshawar-born Amjad Khan, the 18-year-old former Asian junior 
champion, has taken a giant step forward by improving his ranking 
from 24 to 15.
The top 24 in the December rankings are: 1- Peter Nicol (Scotland), 
2- Ahmed Barada (Egypt) 3-Jonathan Power (Canada), 4-Paul Johnson 
(England), 5-Martin Heath (Scotland) 6-Dan Jenson (Australia), 7-
Rodney Eyles (Australia), 8-Jansher Khan (Pakistan) , 9-Simon Parke 
(England), 10-Derek Ryan (Ireland), 11-Alex Gough (Wales), 12-Chris 
Walker (England), 13-Mark Chaloner (England), 14-Byron Davis 
(Australia), 15-Amjad Khan (Pakistan), 16-Mark Cairns (England), 
16-Graham Ryding (Canada), 18-John Whites (Scotland) 19-David Evans 
(Wales), 20- Paul Roice (Australia), 21-Stefan Casteleyn (Belgium), 

22-Omar Elborolossy (Egypt), 23-Anthony Hill (Australia) 24-Amir 
Wagih (Egypt).

Sohail faces the axe: Captain for Indian tour on council's agenda
Samiul Hasan

KARACHI, Dec 2: The fate of skipper Aamir Sohail hangs in the 
balance as the Pakistan Cricket Board (PCB) called its executive 
council meeting on Dec 8 to discuss the cricket team's inept 
PCB chairman Khalid Mahmood said from Lahore on Wednesday that the 
meeting was a scheduled one but the timing of it definitely conveys 
the message.
"Naturally, every cricket board official is concerned about the 
performance of the team and that's why we have called the meeting," 
admitted Mahmood.
Informed sources, however, stated that the two-point agenda for the 
meeting also includes the appointment of captain for next month's 
tour of India.
He said the team's performance against Australia and Zimbabwe would 
be discussed in detail "and if the council thought necessary that 
certain decisions have to be taken, then it wouldn't hesitate in 
taking those steps.
"Not only captain's role would be discussed, the selection 
committee and the coach would also come under discussion. Not 
necessarily the captain would be changed, the entire setup can be 
replaced or nothing could happen. The executive council is the 
supreme body and has all constitutional powers to take decisions 
which can be in the best interest of the game."
Wasim Akram and Moin Khan are emerging as likely replacements for 
Sohail whose seven Test innings as captain have yielded 223 runs 
with one century besides a 1-0 series loss to Australia  first in 
39 years  and a seven-wicket drubbing at Peshawar by Zimbabwe 
earlier this week.
Insiders, nevertheless, said efforts were being made from all 
quarters to bring Wasim Akram back as he enjoys a clean support 
from the entire team.
"Indian tour is very crucial and the best player who can lead from 
the front and motivate the side into a winning one should be 
appointed the captain. At present, Wasim Akram is the only player 
who can deliver the goods," a councillor, on the condition of 
anonymity, said.
Javed Miandad said from Lahore that he would be attending the 
meeting "and would honestly brief the executive council. I don't 
know what they would be asking me but I am prepared to answer all 
questions to the best of my knowledge.
"I plan to ask for additional powers to criticise the team and the 
players if they don't come upto expectations."

Zimbabwe register maiden 7-wicket win against Pakistan
Samiul Hasan

PESHAWAR, Nov 30: Pakistan touched their lowest ebb on Monday when 
Zimbabwe nailed them by seven wickets to win their maiden Test 
abroad with more than five sessions to spare in the first cricket 
Test at the Arbab Niaz Stadium.
Murray Goodwin, who has a phenomenal record of a century and six 
half centuries in seven Tests before this one, dashed Pakistan's 
hopes of an unlikely victory on the fourth day when he powered his 
way to a magnificent unbeaten 73.
Zimbabwe resumed this morning at 70 for one chasing 162 for 
victory. They wrapped up the proceedings in just 101 minutes when 
former captain Andy Flower handsomely drove Aqib Javed to cover 
boundary to give Zimbabwe a historic win.
Flower remained unbeaten on 17 with a six and two boundaries as 
Zimbabwe scored almost run-a-minute on a wicket which didn't lost 
bounce and assistance for the seamers.
Wasim Akram, nevertheless, stood tall amidst Pakistan's humiliation 
when he once again showed his wits and hunger for more success by 
picking up two more wickets to his last evening's scalp of Gavin 
He finished with three wickets for 47 runs for match figures of 
eight for 99. He is now two short of becoming seventh all-time 
great by taking his tally of wickets to 354. He needs one more 
wicket to share the place with Dennis Lillee.
However, Akram's brilliance was not enough to break the resistance, 
determination and application of Murray Goodwin. The stylish 
batsman slammed 13 exquisite and beautiful boundaries in his 124-
ball innings.
He had reached his seventh half century in Tests from 82 balls with 
eight boundaries.
Together with Grant Flower (31), Goodwin added 81 runs for the 
second wicket to provide Zimbabwe the launching pad for their first 
success abroad in 16 attempts. They now have three wins in 32 
Tests, including two against Pakistan and one against India.
A rush of blood on Flower's account brought his demise when he was 
caught by Moin Khan after facing 101-balls out of which five were 
converted into boundaries. Akram then bowled a nasty bouncer to 
Alistair Campbell and the best the Zimbabwean captain could do was 
to save himself from being hurt seriously by getting a glove and 
Ijaz Ahmad holding easiest of catches.

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