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DAWN WIRE SERVICE
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Week Ending : 18 July 1998 Issue : 04/28
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Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS
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NATIONAL NEWS
Pakistan may stop paying debts: Sartaj
Pakistan buys 500,000 ton wheat from US, Australia
Census results being evaluated to remove lacunas
Pakistan won't yield to any pressure: PM
Non-bailable warrant for arrest of Benazir
No intention to freeze lockers, says Nawaz
UN urged to take notice of Kashmir situation
SC continues hearing: Curb on power to proclaim emergency sought
Split in BNP over Mengal's election
Govt clarifies position: Rangers' police powers not withdrawn
APTMA opposes 3pc additional GST
---------------------------------
BUSINESS & ECONOMY
Dollar demand down as rupee up
IMF may release loans this month
Rs57bn at risk in case of liquidation
5 top banks to recover Rs8bn cash in 1998
30pc cash margin on LCs push prices up
4.4-11.1pc dumping duties imposed
Billions from Provident Fund eaten away
HBL launches 'Crore Pati Deposit Certificates'
Stocks maintain upward trend, recover 35.19 points
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EDITORIALS & FEATURES
Riding out the storm Ardeshir Cowasjee
On the brink of default Irfan Husain
The crisis and its imperatives M.B. Naqvi
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SPORTS
Zarak Jahan clinches Asian squash title
Pakistan U-18 hockey team for German tour announced
National athletics trials on July 25
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NATIONAL NEWS
980717
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Pakistan may stop paying debts: Sartaj
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By Our Staff Correspondent
WASHINGTON, July 16: Finance Minister Sartaj Aziz said in an
interview published here on Thursday that Pakistan was running out
of money and might stop paying its debts.
He told the Washington Times that the flow of money from lenders
the world over had dried up since the sanctions were imposed last
month.
The US State Department, however, disagrees with his claims and in
several comments made in the last few days senior officials have
argued that the economic situation in Pakistan was not caused by
the impact of the sanctions but because of the government failure
to implement the much-needed structural reforms in the past 18
months.
It was not clear when the finance minister gave the interview to
the Washington newspaper's correspondent Patrice Hill but it
appeared from the comments that it was before his latest visit to
Saudi Arabia and UAE where Pakistan was assured of badly needed
help by the Arab states.
Mr Aziz said: "Our reserves are really low. If we don't get new
money then obviously we are unable to pay our debt servicing.
Pakistan's finances had been healthy before the sanctions were
imposed. Pakistan has never defaulted on its obligations in the
last 50 years."
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980717
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Pakistan buys 500,000 ton wheat from US, Australia
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Shaheen Sehbai
WASHINGTON, July 16: Pakistan purchased half a million tons of
wheat on Thursday, 150,000 tons more than originally scheduled, as
the US and Australian suppliers quote the lowest rates ever,
officials here said.
"We decided to buy more partly to compliment the US farmers who
worked hard to get the US sanctions removed and partly to
capitalize on the rock bottom rates," an official told Dawn after
the bids were awarded by the Pakistan embassy Thursday morning.
The US and Australian companies quoted wheat rates ranging from $99
to $102 per ton and officials said freight rates from both US and
Australian ports were also low, $17 per ton from the US and $12
from Australia.
The US farmers got the bulk of the share of the Pakistani purchases
300,000 tons as against 200,000 which would be shipped by the
Australians.
The wheat would be shipped from the US and Australian ports from
Aug 1-20, officials said.
Officials said at an average cost of about $112 per ton C&F
Pakistan, the purchases would consume about $32m from the available
credit of $88m under the US commodity credit scheme. The remaining
amount of $56m would be available until October.
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980718
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Census results being evaluated to remove lacunas
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Correspondent
ISLAMABAD, July 17: The Statistics Division has directed the
Federal Bureau of Statistics to carry out evaluation of the
recently held population census in Pakistan to remove any lacunas
in its operation, an official source told Dawn here on Thursday.
While disclosing this, the official stressed that the provisional
results of the census announced by the finance minister were
plausible, authentic and reflected the actual demographic changes
that have occurred in different parts of the country in 1970s,
1980s and 1990s.
The decision to undertake evaluation, therefore, did not denote
dissatisfaction with the results of the census as announced by the
finance minister last week, the official said. On the contrary, he
claimed, the census was held in a more scientific manner than in
1981, more so as the armed forces were associated with it. He did
not see any reason why the major findings of the census should be
different from the reality as was being alleged by certain groups.
Those questioning the authenticity of the results should also cite
the reasons for their conclusions, he remarked.
PUNJAB: The finding that the growth rate of the population of
Punjab was on the decline was quite plausible, he asserted. He
cited two main reasons for this: (1) the Punjab was more affluent
than other provinces; and, (2) its population was moving out. In
1970s and 1980s, the emigration was directed towards Karachi; in
1990s, it is going out of Pakistan.
SINDH: As regards Sindh, he said the demographic pattern in
interior Sindh had changed in recent decades. Earlier, the
population had tended to increase because some of the water-
intensive industries such as fertilizer were disallowed inKarachi
and encouraged to be set up in Sindh because of greater
availability of water there. There were two reasons for this: (1)
waterlogging and (2) the crime wave. Many people shifted to urban
areas where small towns turned into cities, such as Qasimabad. This
was the main reason for the decline in population growth in
interior Sindh.
KARACHI: The official also expressed surprise over the contention
that the population of Karachi had been under-reported. In the
first place, he said, the increase in population in that city from
5.2 million to 9.2 million since 1981 in itself was a major change.
And the growth rate was also fairly high: 3.45 per cent. It had,
however, dropped from over 4 per cent. The main factor responsible
for this was the MQM factor and the crime which registered a
dramatic increase in the mid-1980s.
"Over this period, the industrial estates of Nooriabad, Lasbela,
etc, have been in a shambles and many industries have shifted to
the Punjab," he said.
The dramatic increase in Islamabad's population was also the result
of migration from Karachi, he stressed.
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980715
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Pakistan won't yield to any pressure: PM
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Bureau Report
ISLAMABAD, July 14: Prime Minister Nawaz Sharif declared that the
nation was fully capable of overcoming the current economic crisis
but, he warned: "If any arm-twisting tactic was applied to
Pakistan, the country would resist it forcefully." Presiding over a
meeting of economic experts, bankers and leading businessmen here
on Tuesday, the prime minister said: "We will never submit to
coercion or pressure in any form."
He said the nation had an inherent potential to face challenges and
withstand trials and tribulations, hence it was fully capable of
overcoming the current economic crisis.
The PM pointed out that all attempts to exploit thepost-May 28
developments would fail and the nation would soon tide over its
difficulties. The present phase, he assured, was a temporary one
and would soon be over. "Nothing is more precious than preservation
of our political independence and territorial integrity," he added.
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980717
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Non-bailable warrant for arrest of Benazir
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Asad Ali
LAHORE, July 16: An Ehtesab Bench on Thursday issued a non-
bailable warrant for the former prime minister Benazir Bhutto for
July 27 and dismissed her application questioning the jurisdiction
of the Lahore High Court to try the ehtesab (accountability)
references filed against her.
The bench also dismissed her request that Justice Ihsanul Haq
Chaudhry should not hear cases against her and that proceedings in
her cases should be adjourned till mid-August. Notice has been
issued to Ms Bhutto's surety.
The court comprising Justice Ihsanul Haq Chaudhry "partly allowed"
an application filed by Senator Asif Ali Zardari by defreezing his
assets which he had declared in his tax forms and before the
election commission. But the senator has been refrained from
alienating or parting with the assets. His application seeking
transfer of his cases to the Sindh High Court was dismissed.
The court said it would take up Ms Bhutto's application against the
freezing of her assets when she appears before it.
The court asked Mr Ahsan to produce the high court order on the
basis of which the application was filed. The application mentions
that Justice Chaudhry, in a writ petition filed in Jan 1998 by
advocate Javed Iqbal Geoffrey, had passed an adverse order only
against Ms Bhutto and her family although Prime Minister Nawaz
Sharif, PTI chief Imran Khan and the former caretaker prime
minister Moeen Qureshi were also respondents in the case.
The counsel, requesting again for an adjournment, said it was
reasonable for him to believe that the bench would not assemble
after seeing a notice signed by the reader of Justice Farrukh's
court mentioning that the judge was on leave and the court would
not function.
The court said it would look into the matter and refused the
request for adjournment. It said the court would not be able to
proceed with the cases if adjournments were sought in this way. It
said the counsel should have come prepared when proceedings were
fixed for Thursday. The case was earlier fixed for Wednesday but
the proceedings were not held due to the death of a high court
judge.
NEW REFERENCE: The Ehtesab Bench directed the special prosecutor to
file an application giving his position about the reference he
referred to as a "reference supplementary" to the reference no 26
filed against Ms Bhutto and which, her counsel contended, was a new
reference.
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980712
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No intention to freeze lockers, says Nawaz
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Bureau Report
ISLAMABAD, July 11: Prime Minister Nawaz Sharif declared here on
Saturday that the government has no plan, whatsoever, to freeze
bank lockers or demonetize the currency.
"This is just frivolous to imagine that we will be raiding on banks
to freeze lockers or the rupee accounts," he added.
He told reporters at the PM House that there was no programme to
freeze the lockers as was being rumoured throughout the country. "I
do not believe in putting restrictions but some people are forcing
me to take action against them for spreading all kinds of unfounded
stories and rumours".
Similarly, he said there was no programme to demonetize the
currency. "Why should we do so".
However, he defended the freezing of the FCAs and said it was
inevitable to stop the flight of the capital. He said he had
already told the nation on May 28 that Pakistan will have to face
tough time for having conducted six nuclear tests.
The prime minister said the strong dollar would soon go down and
the Pakistan rupee will have its right place in the market. "I
assure you that it is a matter of few days and then you would see
the dollar coming back to its original place," he claimed.
DOLLAR PRICE: The rupee lost 100 paisa more to the dollar in the
open market on Saturday as the ban on selling of foreign exchange
at the official rates kept the high demand for the green bill
intact, adds our Karachi Staff Reporter.
Money changers said they were buying the US dollar at Rs59.50 and
selling for Rs60.00 against the Friday price of Rs58.00 and
Rs59.00. They linked the continual fall of the rupee to the ban on
selling of official foreign exchange to overseas travellers and
students studying abroad plus uncertain economic conditions.
GOLD UP:The gold prices too kept on soaring here on Saturday and
registered a surge of Rs206 to Rs5,350 per 10 grams (24 carat) as
against Rs 5,144 the preceding day.
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980713
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UN urged to take notice of Kashmir situation
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By Our Correspondent
RAWALPINDI, July 12: Jammu and Kashmir Democratic Freedom Party
(JKDFP) will stage a sit-in (dharna) in front of the United Nations
Military Observers Group in Rawalpindi on July 13 from 10am to 12
noon as the day will be observed as martyrs� day throughout Jammu
and Kashmir.
President of the JKDFP, Mehmood Ahmad Saghar, in a statement issued
here on Saturday, said that the people of Jammu and Kashmir, whose
land had been occupied by a foreign power, and whose aspirations
for freedom were being crushed under the heel of military force,
seeks the implementation of UN resolutions in Jammu and Kashmir.
Mr Saghar appealed to the UN and the world community to take an
urgent notice of the grave situation in the held Kashmir. He
reiterated that India could not suppress the freedom movement for
long. Since 1947 Kashmir had been witnessing nothing but blood and
tears, he added.
The JKDFP leader condemned the atrocities of the Indian forces
perpetrated on the people of occupied Kashmir and urged the
international human rights organisations to take cognizance of the
deteriorating situation there.
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980716
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SC continues hearing: Curb on power to proclaim emergency sought
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Shujaat Ali Khan
LAHORE, July 15: The seven-member bench of the Supreme Court
hearing challenges to the imposition of emergency has been
requested to circumscribe the power to proclaim a state of siege
under Article 232 to 237 as they militated against the basic
framework of the Constitution trichotomy of powers, provincial
autonomy, fundamental rights and their enforcement by superior
courts.
Appearing for the former Punjab chief minister Mian Manzoor Wattoo,
advocate Shabbar Raza Rizvi dissociated himself from the position
taken by advocates Shahzad Jahangir and Ikram Chaudhry that while
there could be justification for emergency after the Indian nuclear
blasts on May 11 and 13, it ceased to exist on May 28 when Pakistan
evened the score and, in the words of Prime Minister Nawaz Sharif,
"restored the strategic balance".
Mr Rizvi said it was not for the first time that India had exploded
a nuclear device. The government had no valid reason to proclaim
emergency either on or before or after May 28. When the bench
referred to the threatening statements made by some Indian
ministers, he said no emergency was declared when the statements
were made and India had since offered economic cooperation.
The counsel referred to the press statements of the prime minister
and his ministers, particularly the Senate leader Raja Zafarul
Haq's declaration on the floor of the House that flight of capital
was imminent in the wake of blasts and likely sanctions. But, he
said, Article 232 did not provide for emergency to freeze foreign
currency accounts.
The only ground on the basis of which emergency could be imposed
under Article 232 was threat to the security of Pakistan or any of
its parts by war or external aggression or by internal disturbance,
he said.
According to the government's own admission, he added, there was no
internal disturbance beyond the power of a provincial government to
control even in Sindh. Similarly, there was no threat of Indian
aggression because of the nuclear deterrence convincingly
demonstrated by Pakistan.
The government, he pointed out, had failed to produce any material
on the basis of which the emergency proclamation was issued. No
material was shown to the members of parliament when they were
asked to approve the proclamation and the subsequent order to
suspend fundamental rights. The amendment to the May 28
presidential order issued Article 233(2) by a notification on July
13 evidenced absence of application of mind by the president, he
stated.
The bench pointed out that he was relying on isolated observations
made in newspaper reports. The court had no authentic parliamentary
record to ascertain the reason officially given in parliament for
the imposition of emergency. It had before it only the
proclamation, which said that national security was threatened by
external aggression as well as by internal disturbance.
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980716
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Split in BNP over Mengal's election
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Saleem Shahid
QUETTA, July 15: The Balochistan National Party (BNP) splits amidst
allegation of rigging in the party polls. Six ministers and their
supporters refused to accept the result of the party election in
which Sardar Ataullah Mengal was elected party chief.
A news conference was held by Mir Israrullah Zehri, Syed Ehsan
Shah, Mir Mohammad Ali Rind, Mir Asadullah Baloch, Prince Musa Jan
and Abdul Ghafoor Kalmati, at the Press Club here at midnight. The
group was led by Mohim Khan who lost election against Sardar
Ataullah Mengal.
Mohim Khan claimed that the ruling BNP had given the false
impression that he had withdrawn from the polls or not seriously
interested in contesting.
The group accused the provincial government of supporting Islamabad
and bartering away the rights of the people of Balochistan. They
said Islamabad had been given a blank cheque by the Balochistan
government.
They blamed the government for lawlessness, breakdown in law and
order, kidnapping, murder in broad daylight and mass unemployment.
They ruled out that there could be a patch up. Mir Israrullah Zehri
insisted that he would talk with the opponents within the party
constitution and its framework. He did not rule out possibility of
merger or forming an alliance with other political parties.
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980713
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Govt clarifies position: Rangers� police powers not withdrawn
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By Raja Zulfikar
ISLAMABAD, July 12: Federal government has communicated to
authorities in Sindh that police powers vested in Rangers to
improve law and order situation in Karachi continue to exist and
Rangers have consequently launched the operation.
Informed sources told Dawn that the controlling authority of the
Rangers formally left a message here in Islamabad that they had
begun to setup posts in various parts of Karachi and hoped they
would be able to halt the criminal activities soon.
The Rangers were put into action after the federal government sent
a letter on July 4 to the concerned authorities informing them that
they should use search and arrest warrants in their attempt to
improve the deteriorating law and order situation.
Sources said the July 4 letter also clarified that the powers of
Rangers which in technical terms are called police powers,
werenever withdrawn. The letter from the Interior Ministry in fact,
intended to do away with the confusion that was created after the
statements in Islamabad about the powers of Rangers.
�The SRO of 1995 clearly states that the Rangers can search any
suspect and even arrest him if they think fit. And this SRO remains
valid todate,� a senior government official said clarifying the
position. Never were these powers, he said, withdrawn from Rangers.
Apart from the July 4 letter, the issue was also raised and settled
in a meeting of the Civil Armed Forces (CAF) held at the Interior
Ministry on Saturday.
The CAF meeting was attended by two brigadiers and three colonels
who included the head of Rangers in Sindh. He reportedly told the
officials of the ministry that after the letter of the federal
government, the Rangers had initiated their operation against the
law breakers in Karachi.
Sources said he also informed the meeting about the problems being
faced in dealing with criminals and the political hurdles coming in
the way of restoring law and order situation.
Sources said the CAF officials unanimously called for enforcement
of the Army Act of 1952 in order to ensure discipline. The head of
Rangers in Karachi reportedly said that the staff was dealt
presently under the Civil Servants Rules under which cases against
the staff, if any, were referred to the courts.
The four-hour CAF meeting also discussed in detail the incidents of
smuggling across the borders as the head of Pakistan Coast Guards
informed the officials of the Interior Ministry that a few more
steps were needed to be taken to improve the situation further.
Certain lapses due to various reasons were also discussed in the
meeting and Pakistan Coast Guards told that they should effectively
deal with the problem in the light of the national plan of action
devised last year to combat terrorism.
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980717
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APTMA opposes 3pc additional GST
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Reporter
KARACHI, July 16: Members of All Pakistan Textile Mills Association
(APTMA) have threatened to close down their units if the government
imposed additional 3 per cent General Sales Tax (GST) on yarn
produced by spinning mills.
This matter came up during 8th emergent meeting of the managing
committee of APTMA held at the association's principal office here
on Thursday.
The participants were in furious mood over the issue and refused to
make additional payment over and above 12.5 per cent GST being
already paid by the industry on yarn.
"We are sorry to say that it seems that the government is lacking
political will to impose 12.5 per cent GST on textile processing
industry, including looms and sizing industry," was the popular
opinion of the participants to the meeting.
The well participated meeting presided over by Chairman, APTMA,
Jahangir Elahi, witnessed enraged moods of many members who were
perturbed over forex crises and the way the economic issues are
being presently handled.
They were also critical of the role played by the State Bank which
issued over 40 circulars in a short span of 10 days in connection
with the foreign currency accounts.
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BUSINESS & ECONOMY
980714
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Dollar demand down as rupee up
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Reporter
LAHORE, July 13: The demand for US dollars went down here on Monday
as the rupee gained 400 paisa dipping the open market exchange rate
below the 60 rupee mark, dealers said.
At close of business on Monday, dealers said they were selling the
dollar for Rs 58 and buying it for Rs 57. On Saturday the dollar
was being sold for Rs 62 and bought for Rs 59.
A dealer at a leading moneychanger said the reason for the sharp
increase in the kerb rate was the panic buying of people. This
considerably pushed up the demand for dollars increasing its price
relative to the rupee. He said now that demand had slackened the
value of the dollar had comparatively reduced relative to the
rupee.
The government has been saying of late that the price of the dollar
would go down if people stopped its panic buying and this is what
happened on Monday, the dealer said.
However, APP on Monday quoted the president of the Forex
Association of Pakistan, Malik Bostan, as saying that the
moneychangers after a meeting on Sunday with the State Bank of
Pakistan (SBP) governor had voluntarily brought down the rate of
the dollar in the kerb market. Bostan was also quoted as saying
that action by the SBP against "illegal money changers" was
expected because they were mainly involved in speculative currency
trading.
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980718
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IMF may release loans this month
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Ihtashamul Haque
ISLAMABAD, July 17: The executive board of the International
Monetary Fund (IMF) is likely to meet later this month in
Washington to consider and approve the release of third and fourth
tranches of the $1.6 billion ESAF and EFF arrangements.
A federal ministry official talking to Dawn claimed that Pakistan
would not default as, according to him, the IMF would not let
Islamabad down.
Official sources also claimed that Muslim countries were expected
to extend substantial financial assistance to Pakistan to enable it
to cope with the situation.
They said that PM's Gulf visit had been successful and that those
countries were likely to help Pakistan tide over its financial
problems.
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980712
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Rs57bn at risk in case of liquidation
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Sabihuddin Ghausi
KARACHI, July 11: As government mounts recovery operations against
loan defaulters, on expiry of July 10, the deadline set by Prime
Minister himself, bankers estimate 44 per cent of the due amount
Rs 130.5 billion will remain unrecoverable even if borrowing
enterprises are liquidated.
According to the estimates worked out by 11 lending institutions,
which include government-run banks as well as privatized banks and
DFIs, Rs 73.5 billion would be recovered in case of liquidation of
enterprises and Rs 57 billion will remain unrecovered.
This default amount of Rs 130.5 billion pertains to those loans
which are Rs 30 million and above showing position up to end March
this year. It includes Rs 87.4 billion principal amount and Rs 43.1
billion mark-up.
This position of outstanding amount and the efforts made so far
including cash recoveries made by banks till end May and the
strategy to be adopted for quick recovery was discussed at the
highest level in Islamabad on Friday.
"In the current economic emergency, draconian measures may be
contemplated " is one of the solutions offered, as a few
participants in Friday meeting at Islamabad observed that "default
culture has become so deeply embedded that a shake up of both
structures and values is long over due," a top banker confided.
All top bankers are meeting at State Bank of Pakistan on Sunday
(July 12) to work out a follow-up strategy of the work plan
discussed in Friday meeting at Islamabad. Besides, the issues which
cropped up after freezing of foreign currency accounts are on the
agenda. The meeting will consider action to be taken against 10 top
defaulters of each of the government-run banks and DFIs and also
those of privatized banks and DFIs.
Inquiries made with banks showed that 518 cases were filed in the
courts by these lending institutions against borrowers who obtained
loans of Rs 30 million and more.
These cases involve amount of Rs 50.6 billion against which interim
decrees were issued in 94 cases involving Rs 11.2 billion.
Executions application of these decrees were filed in respect of 65
cases for recovery of Rs 7.1 billion. How much amount has been
realized is not known. A number of bankers, however, consider poor
liquidity of the enterprises as the main reason for failing to
achieve success in making recoveries through legal system.
One of the many proposals being made to reactivate sick units is to
ask government to offer remission on levies and taxes and then
offer these enterprises to investors without asking source of their
funds.
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980715
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5 top banks to recover Rs8bn cash in 1998
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Sabihuddin Ghausi
KARACHI, July 14: All the five top commercial banks of the country
are set to make a total cash recovery of about Rs 8 billion in 1998
in respect of non-performing loans estimated at Rs 125.70 billion
in January this year.
This cash recovery, bankers say is part of rescheduling, write-offs
and waiver of over Rs 45 billion unpaid loans and eventually all
these five banks will end 1998 with a portfolio of more than Rs 143
billion non-performing loans.
Under new arrangements, the board of directors of each bank has
been authorized to deal with bad debt cases and carry out
rescheduling which may involve write-offs, waivers and partly cash
recovery.
Bankers report government-owned Habib Bank showing the highest
amount of Rs 51.59 billion bad debts on January 1 this year. Its
Asset Management Remedial unit is engaged in rescheduling Rs 25
billion loans in 1998 which apart from write- offs involve cash
recovery of Rs 3.5 billion in whole year.
"The bank has already recovered cash of about Rs 1.5 billion in
respect of non-performing loans till end May and will recover Rs 2
billion more before 1998 runs out," a senior executive of Habib
Bank informed who claimed that the bank made cash recovery of over
Rs 3 billion in 1997.
HBL's bad loan portfolio will go up beyond Rs 60 billion at the end
of 1998 as Rs 9 billion loans are expected to become non-
performing.
Declassification of loans is being mentioned as one of the main
reasons for delay in release of HBL's annual report and balance
sheet for the year 1997.
Other major nationalized commercial bank, National Bank of Pakistan
reported Rs 31.28 billion non-performing loans on January 1 this
year and is engaged in rescheduling of Rs 7.82 billion bad loans in
1998. It reports cash recovery of over Rs 632 million till end May
and has been given a target to show a total of Rs 1.5 billion cash
recovery at the end of 1998. In 1997, NBP made cash recovery of
over Rs 2.80 billion.
United Bank Limited is involved in rescheduling of Rs 8.5 billion
in 1998 and in process is expected to make a cash recovery of Rs
1.78 billion. Its non-performing loans portfolio will increase from
Rs 28.8 billion early this year to Rs 31.3 billion at the end of
1998. In 1997, UBL claimed to have made a cash recovery of Rs 3.15
billion. Till end May this year UBL reported cash recovery of Rs
742.64 million.
According to bankers, Agricultural Development Bank has been given
the highest target of cash recovery at Rs 4.2 billion against which
it reported recovery of Rs 1.74 billion till end May. In 1997, ADBP
recovered Rs 3.52 billion in cash.
Other institutions including Industrial Development Bank of
Pakistan is engaged in recovery of Rs 538.36 million cash, National
Development Finance Corporation Rs 682 million, Small Business
Finance Corporation Rs 194 million, privatized Bankers Equity Rs
275.69 million and Pakistan Industrial Credit and Investment
Corporation Rs 193 million.
Bankers say that all these 15 institutions are expected to make
total cash recovery of Rs 14.29 billion in respect of their non-
performing loans. They have reported cash recovery of Rs 5.95
billion till end May. In 1997, all these 15 institutions showed
cash recovery of Rs 19.42 billion.
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980714
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30pc cash margin on LCs push prices up
-------------------------------------------------------------------
Sabihuddin Ghausi
KARACHI, July 13: Forward trading in a number of commodities
witnessed on Monday, an accelerated rising trend following State
Bank of Pakistan's decision a day before, demanding 30 per cent
cash margin from importers on opening letters of credits in the
banks.
Traders say that 25 kilogram of milk powder bag was being quoted at
Rs175 and tea a premium of Rs20 per kilo and similarly a large
variety of consumer items including spices and dry fruits are
showing trends of upswing following the 30 per cent margin on
imports.
"I opened a letter of credit for tea for Rs48.15 a dollar in a bank
for 30 days shipment", a leading tea importer of Jodia Bazar said
who pointed out that banks were demanding a premium of Rs1.65 on a
dollar above the official parity rate of dollar for opening letters
of credit. Bankers however justify this excess charging on the
plea, as one senior banker incharge of foreign exchange explained,
"foreign exchange market is volatile and no one knows at what price
dollar would be pegged when shipment is made and documents are
received by the bank".
Bankers and traders agree that State Bank has imposed condition of
30 per cent margin to discourage imports but fear that it has set
in motion a fresh wave of inflation that would hit domestic market
sometimes next month.
Also to be hit by this condition would be the local manufacturers
involve in production of detergent soaps, toothpaste, cosmetic
items and all those goods in which substantial inputs are imported.
There is also a looming fear of a fresh devaluation by the
government being estimated conservatively at around 10 to 12 per
cent by the bankers and up to 15 to 20 per cent by the traders.
"Devaluation has become imminent as gap between official parity
rate and kerb rate in market is anywhere up to 25 to 30 per cent",
a well known tea trader of Jodia Bazar explained.
He said the difference between two rates is such that overseas
Pakistanis who have been offered generous incentives and
concessions on import on their transfer of foreign exchange to
Pakistan are not availing it.
Top bankers in the city claiming to have close contacts with
decision makers in Islamabad endorse the views of devaluation has
now become inevitable. They however, contend that government will
have to think a lot before going this way.
"A rupee rise in dollar value means addition of Rs4 to Rs5 billion
on debt servicing cost on budget", a well placed banker explained.
"Debt servicing even at present level in the budget has become
unsustainable and a further rise of 10 to 12 per cent will unleash
unmanageable inflationary pressures", he said.
According to bankers the government will take course of devaluation
only after persuading the international lenders to reschedule the
loans repayment and provide some relief in servicing of these debts
for next few years.
"Pakistan's economic fundamentals are sound and a respite of few
years from debt servicing burden will make the economy buoyant and
generate enough capacity to meet all obligations with grace and
dignity", the banker said.
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980717
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4.4-11.1pc dumping duties imposed
-------------------------------------------------------------------
Pervaiz Ishfaque Rana
KARACHI, July 16: The European Commission (EC) on Tuesday imposed
definitive anti-dumping duties on imports of unbleached cotton
fabrics (UCF) from Pakistan and four other Asian countries.
According to a message received here on Wednesday, from Brussels,
headquarter of EC, duties ranging between 10 to 18 per cent, will
be imposed immediately on unbleached cotton fabrics (UFC) exports
from China, India, Pakistan, Egypt and Indonesia.
The definitive duties being imposed are as follows: India 4.1% to
16.1%; Pakistan 4.4% to 11.1%; Indonesia 11.8% to 13.7%; China
10.9% and Egypt 18.5%.
Duty margins for Pakistani exporters, who cooperated with the
Commission during the investigation, has been fixed at 10.1 per
cent and for non-cooperating 11.1 per cent. Similarly, for India
the duty rate has been fixed at 12.8 per cent for cooperating and
16.1 per cent for non-cooperating exporters/companies.
Under EC regulations these countries can submit their rebuttals by
July 24, and could also ask for hearing their viewpoint against the
definitive measures taken by the Commission.
The affected countries under these regulations could also offer
undertakings for which Pakistan has already informed the Commission
of its willingness to sign such an undertaking whereas other
countries may offer undertakings upon receipt of the disclosure.
The Commission, earlier this year, slapped much higher provisional
anti-dumping fines on imports of unbleached cotton fabrics from the
five Asian countries, including Turkey.
Subsequent to the imposition of provisional anti-dumping duties on
March 25, 1998, these countries were asked to submit their rebuttal
so that the Commission could know their views on the provisional
findings.
The provisional fines were imposed following an inquiry initiated
by the Commission on July 10, 1997, showing that all six countries
are 'dumping' their goods on European market causing 'material
injury' to their textile industry.
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980716
-------------------------------------------------------------------
Billions from Provident Fund eaten away
-------------------------------------------------------------------
Muhammad Ilyas
ISLAMABAD, July 15: The government has eaten away billions of
rupees by arbitrarily deducting thousands of rupees from the
General Provident Fund accumulations of each of its employee.
Not only the employees of federal ministries but also of autonomous
corporations found, to their great shock, on receiving pay slips
for the month of June, 1998, issued by the Accountant General
(Pakistan) Revenues that they were poorer by huge amounts out of
their hard-earned savings.
'This is the second time the Government has breached the people's
trust after having frozen the foreign currency accounts which it
had repeatedly declared inviolable,' remarked an officer who is on
the verge of retirement and had already made a deal for purchase of
a small house for himself. 'How will I make up the difference
between the contract and the money now available after the
unexpected deduction in my G.P.F. account?' he wondered.
The inviolability of provident fund is a principle steeped in long
tradition as well as rules. No institution or individual, howsoever
powerful, not even a court of a law has been given the authority
to forfeit an employee's G.P. Fund or even deprive him/her of a
fraction of it on any ground whatsoever, a number of veteran
government employees well-versed in rules observed.
So far, private companies were embezzling provident fund deposits
of their employees and now the government too has stepped into
their shoes, they observed.
In fact, many employees would not have even noticed the difference
between the sum mentioned in the pay slips of May and June, had
some of the employees not been particularly interested in knowing
how much they would get after retirement.
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980716
-------------------------------------------------------------------
HBL launches 'Crore Pati Deposit Certificates'
-------------------------------------------------------------------
Reporter
LAHORE, July 15: Habib Bank Limited on Wednesday introduced 'Crore
Pati Deposit Certificates' to enhance its liquidity position and
check foreign currency flight abroad.
Launching the new venture HBL Executive Senior Vice President,
Anique Khawar told a news conference that the bank felt that the
existing facilities to encourage public savings were inadequate and
some thing more lucrative had to be offered to the general public
to boost savings. The new certificates, he said, would go a long
way in boosting the saving rate in the country.
The CPDCs are issued for 6 months, and one year at 10 per cent
profit. The profit is paid half yearly. The certificate holders can
win prizes from the lucky draws held every month with cash prizes
from Rs100,000 to Rs 10,000. One grand lucky draw will be held
quarterly offering prizes worth Rs10 million.
Khawar told reporters that after freezing of the foreign currency
accounts and loss of confidence by account holders in these
accounts there had been a threat of funds flight from the banking
system.
"It is the time banks devise schemes which restore depositors
confidence and at the same time improve the low savings rate",
Khawar told a questioner. The certificates cannot be encashed
before 3 months of the date of their purchase and if encashed
within 6 months, no profit will be given to the holder. Profit on
the certificates is subject to Zakat and income tax deductions.
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980718
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Stocks maintain upward trend, recover 35.19 points
-------------------------------------------------------------------
Reporter
KARACHI, July 17: The recovery operation was well-sustained on the
stock market on Friday as investors were not inclined to take a
technical breather and made fresh massive short-covering in the
pivotals at the attractively lower levels.
The KSE 100-share index posted a fresh gain of 35.19 points at
882.95 as compared to 847.75 a day earlier.
The index is virtually racing to attain its base level of 1,000
points, breached for the first time in the trading history of the
Karachi Stock Exchange, and could take a pause after hitting it,
analysts said.
It has recovered over 100 points or 15 per cent during the last
three sessions and there are reasons to believe that it could
attain it possibly by the next week, they added.
"Investor optimism is apparently based on the perception that
leading Gulf countries have indicated to bail-out Pakistan from the
prevailing financial crisis including a possible default," said a
member of the Karachi Stock Exchange.
The waiver received by President Clinton from the Senate to show a
measure of flexibility in regard to economic sanctions on Pakistan
and India was also considered a positive development, he added.
He stated that what surprised most analysts was the strong presence
of some foreign funds who had withdrawn to sidelines after the
recent financial mess and turmoil on the money markets including
run on dollar and gold.
An idea of market's upward drive may well be had from the fact that
it did not react bearishly to the meeting of nationalists parties
and their willingness to protect the interests of Sindh, said a
floor broker.
He said the index has recovered more than 100 points during the
last three sessions and there are reasons to believe that
recessionary cycle has run its course.
Bulk of the short-covering operations were, however, centred around
low-priced bank, energy and chemical shares, which took the entire
market along with them in the plus column.
News that Hub Power has cleared its debt, both foreign and local,
totalling Rs 4.5 billion, including Rs 2.13 billion foreign,
continued to inspire strong buying at the lower levels. It finished
with an extended gain of 90 paisa.
Lever Brothers and Shell Pakistan showed fresh gains ranging from
Rs 15.10 and Rs 7 at Rs 715.10 and Rs 157. Other good gainers were
led by PSO, Pakistan Refinery, Adamjee Insurance, Engro Chemical,
Fauji Fertilizer, which posted gains ranging from Rs 1.25 to Rs 7,
biggest rise being in Shell.
Al-Ghazi Tractors, Faisal Spinning, Cherat Cement and Ibrahim
Modaraba were among the prominent losers, falling by one rupee to
Rs 8.85.
The largest decline was noted in Faisal Spinning which was quoted
on spot basis apparently in a bid to forestall further fall in its
share value. Trading volume fell to 82 million shares from the
previous 109 million shares owing to the absence of leading
sellers. Gainers maintained a strong lead over the losers at 51 to
22 with 39 shares remaining unchanged at the last levels.
PTCL topped the list of most actives, up Rs 1.10 at Rs 18.70 on 39
million shares, followed by Hub-Power, higher 90 paisa at Rs 11.65
on 36 million shares, ICI Pakistan, firm 50 paisa at Rs 12.85 on
2.026 million shares, FFC-Jordan Fertilizer, higher 30 paisa at Rs
14.20 on one million shares, and Sui Northern Gas, up 50 paisa at
Rs 8.75 on 0.599 million shares.
Other actively traded shares were led by D.G.Khan Cement, up 35
paisa on 0.428 million shares, MCB, firm 30 paisa on 0.369 million
shares, Sui Southern, steady 10 paisa on 0.274 million shares, PSO,
up Rs 6.25 on 0.281 million shares, and Dhan Fibre, easy 15 paisa
on 0.245 million shares.
DEFAULTING COMPANIES: Tariq Cotton came in for active selling and
was marked down by 50 paisa on 0.100 million shares but on the
other hand Suzuki Motors attracted good support at the lower level
and recovered 25 paisa on 6,000 shares. Mian Textiles fell 25 paisa
with 1,000 shares changing hands.
Back to the top
===================================================================
EDITORIALS & FEATURES
980712
-------------------------------------------------------------------
Riding out the storm
-------------------------------------------------------------------
Ardeshir Cowasjee
"HOODLUM: The name originated in San Francisco about 1870-72 and
began to excite attention elsewhere in the US about 1877." Hoodlums
are street-rowdies, dangerous roughs. Now, 127 years down the line,
this nineteenth prime minister of Pakistan, Mian Mohammad Nawaz
Sharif, has added another dimension to the meaning of the word.
In late November 1997, all bundled together in the person of our
prime minister were desperation, fear of being convicted, of being
shunted into oblivion, of being declared bankrupt, greed for more
power and more pelf, lack of respect for law and for the sanctity
of the courts, over-confidence, stupidity, and ineptitude. With aid
and support from his equally endowed ministers, parliamentarians
and hangers-on, Nawaz Sharif was spurred on to defend him-self by
perverting the course of justice.
On December 15, 1997, the newly sworn-in Chief Justice of Pakistan,
Ajmal Mian, trod cautiously and appointed Abdur Rahman Khan, J-10
of his court, to hold an inquiry into the matter of rowdyism and
violence in the Supreme Court premises on November 28, 1997, and
"to suggest what steps/action the Supreme Court should
take/initiate in the above matter to avoid such incidents in the
future." Justice Khan was given a difficult job.
Those who could help his inquiry, the authorities and their
minions, were in fact themselves the aiders and abettors.
In his report delivered to the Chief Justice on February 18,
Justice Khan wrote: "As the action of those individuals who forced
their way into the court premises and raised slogans against the
judiciary, prima facie, amounts to gross contempt of this court,"
and he recommended that the Chief Justice constitute a Bench to
initiate contempt proceedings for "the outrageous incident."
The court should identify the stormers, and "once the concerned
persons are identified, the court can then issue notices to them
and then take further action under Article 204 of the Constitution
and the applicable law." The necessity for initiating immediate
action was stressed, the matter being of "paramount importance," as
"the sanctity, dignity and respect of the apex court of the country
is involved. Street power should not be allowed to coerce and
intimidate the judiciary."
And so, within a week, on February 25, the CJ constituted the Bench
to be presided over by Nasir Aslam Zahid, J-5, the former Chief
Justice of the Sindh High Court, sitting with Munawar Ahmed Mirza,
J-6, the former Chief Justice of the Balochistan High Court, and
Abdur Rehman Khan, J-10, the former Chief Justice of the Peshawar
High Court ( who had held the first inquiry ) to delve deeper into
the matter.
The three sat in the original jurisdiction in the Supreme Court in
the matter of Criminal Miscellaneous No.27/98. They met 27 times.
They saw, heard, read, and they examined 53 witnesses under oath.
They rode out the storm and delivered.
By its order of July 3, the Bench held the following, all members
of the Pakistan Muslim League, prima facie guilty of gross contempt
of the Supreme Court, of the violation of the applicable law, and
of being involved in, or aiding and abetting, or facilitating the
storming of the Supreme Court.
PML MNAs: Tariq Aziz ; Mian Mohammad Munir.
PML MPAs: Chaudhry Tanvir Ahmad Khan ; Akhtar Rasool ; Sardar
Mohammad Naseem Khan.
Prime Minister's political secretary: Mushtaq Tahirkheli (sacked
one day, reinstated the next day, rewarded).
PML office-bearers, activists, rabble-rousers, street-fighters:
Shahbaz Ghousi (commander of the Nawaz Sharif Force); Akhtar
Mahmood, (roadrider of Rawalpindi); Babar Awan (divisional
president of the Muslim Students Federation); Ali Abbas (general
secretary of the PML Labour Force, Rawalpindi); Anjum Iqbal (
roadrider of Rawalpindi); Mohammad Faruq (divisional secretary of
the PML Youth Force of Rawalpindi); Mohammad Naseem (Joint
Secretary, PML MSF Labour Force of Rawalpindi); Tanvir Akhtar
(general secretary, PML Youth Force of Rawalpindi); Raja Zafar
Iqbal (joint secretary, PML Labour Force of Rawalpindi); Malik
Mohammad Munawar (general secretary of the PML, Rawalpindi).
*From Babar Awan downwards, all had been accused in Criminal Case
No. 229/97 filed at the Secretariat Police Station, Islamabad,
after the storming of the Supreme Court. They were jailed,
released, garlanded, and rewarded.
Held to be prima facie guilty of aiding, abetting or facilitating
the storming:
Members of the administration: Abid Ali, Acting DC, Islamabad;
Mohammad Ali, AC, Islamabad; Iftikhar Ali Shalwani, AC, Islamabad.
Members of the police force: Tariq Saleem Lone, IGP Islamabad;
Altaf Hussain, SSP, Islamabad; Bashir Ahmad Naseer, ASP, Islamabad;
Liaquat Ali, DSP; Mohammad Ashiq Farooqui, DSP; Inspector Jamil
Hashmi; SHO, Secretariat PS; Inspector Mussarat Hussain Khan, SHO,
Bharakau PS.
The Court has directed that show-cause notices be issued to the
above 26 persons, calling upon them to explain why action should
not be taken against them for contempt of the Supreme Court. It has
established that the storming was premeditated, that a large number
of people had been brought in for the purpose from areas outside
Islamabad, that the flak-jacketed police force present and on duty
at the Supreme Court was sufficiently adequate to deal with the
situation and to prevent the storming, and that had the doors of
Chief Justice Sajjad Ali Shah's Court No. 1 not been closed, it
would have been invaded by the hoodlums and the Chief Justice and
his brother judges then in session would have been physically
molested.
It has been found that there was no impediment whatsoever in the
way of the police that restrained them from controlling the
invading hoodlums and from taking whatever action they should have
taken. The conclusion is that they im-pliedly facilitated the entry
of the stormers into the premises and building of the Supreme Court
of Pakistan.
The video cassette showing the recording of the televised broadcast
by the BBC of the events of that November day, and of the CCTV
cameras installed in the Supreme Court building, provided
unassailable evidence, as did the photographs taken by the press
photographers.
Credit must go to the unknown man (or woman) who one day deposited
at my house the cassette in question which I forwarded to the
succeeding Chief Justice Ajmal Mian with the request that he view
it.
Much credit must also go to senior journalists, Mehmud Ali of the
Business Recorder and Zahid Husain of AP, The Times and Newsline,
to journalists Altaf Hussain Bhatti, Aslam Butt, Abdul Wadood
Qureshi, Naveed Meraj and Fakhr-ur-Rahman (the man who ran into
Chief Justice Sajjad Ali Shah's Court No.1 to warn the judges of
the impending invasion and who, for his timely action in thwarting
their plans, was beaten up in the court room after the judges had
risen, by the PML hoodlums).
Credit also to Hussain Haqqani, journalist, media-man and former
member of both the Muslim League and the PPP governments, former
Spin Doctor of both Prime Ministers Benazir Bhutto and Nawaz
Sharif, who did much behind the scenes to give courage to those
wary of speaking and who himself came forward to tell the court
what he knew.
Of the 53 whose evidence was recorded under oath, the only
politician whose testimony supports the findings of the inquiry
Bench is that likeable Senator, Iqbal 'Groovy' Haider. He at least
had the grace to tell the truth. The other politicians who
testified, without exception, could easily be convicted of perjury.
The presiding judge, Nasir Aslam Zahid, had an excruciatingly
difficult task. He needed a unanimous order. The pressure on him
and his brethren was heavy, the constraints under which they worked
were known to us all but cannot, under the prevailing
circumstances, be repeated prudently in print. We are now
unprotected. The declaration of the unnecessary 'Emergency' has
deprived us of our fundamental rights.
So far, the storm has been well ridden. The first and second steps
have been taken, without a stumble. The judiciary has helped
itself, it has helped the people, who, to some extent, have
regained confidence in the institution upon which they must rely.
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980718
-------------------------------------------------------------------
On the brink of default
-------------------------------------------------------------------
Irfan Husain
ALTHOUGH the rupee's free fall against the dollar has halted for
the time being, Pakistan's economic woes haven't gone away.
Indeed, our leaders' attitude towards the unfolding scenario
reminds me of the man who fell off the top of a skyscraper. As he
hurtled past the tenth floor, he said: "So far, so good!"
Just the other day, the prime minister chaired a meeting in
Islamabad in order to come up with a contingency plan to deal with
the present crisis. Now the purpose of such a plan in any rational
dispensation is to have it ready before an emergency. In our case,
we have allowed ourselves to be sucked into a crisis, and are now
trying to stumble out. But as is true for most traps, it is much
easier to fall into one than to get out. And unfortunately, Nawaz
Sharif and his associates have neither the credibility nor the
ability to lead us out of the mess they have created.
As Pakistan teeters on the brink of default, we have to face the
fact that the problem was brewing much earlier than the nuclear
tests and the resultant sanctions. Decades of living beyond our
means have brought us to this present pass: year after year, a
succession of governments have spent more than the revenue they
collected, and imported more than we exported. To make ends meet,
we have borrowed heavily from internal and external sources. Now we
can no longer service our external loans.
What are the consequences of the impending default? First and
foremost, nobody will lend us a penny unless it is at exorbitant
interest rates. No foreign exporter will accept letters of credit
from our banks, and will demand cash up front. The rupee will
collapse against the dollar, and inflation will ravage what is left
of the economy. Essential imports will be slow to a trickle, and
industry will come to a grinding halt for want of spare parts and
raw material. The stock market, already at its lowest ever level,
can no longer be considered a vehicle for capital formation: any
new offering in the foreseeable future is doomed to sink without a
trace.
When faced with this doomsday scenario, the most our leaders have
been able to come up with is a National Self-Reliance Fund to which
only a handful of people have contributed a pittance. After being
stung by this government on a number of occasions, people just
don't have any confidence in it. From the cooperative banks scam to
the Yellow Cab scheme, and from the Qarz Utaro Mulk Sanwaro scheme
to the recent Great Bank Robbery which saw private accounts worth
billions of dollars frozen, the ruling party and its foot soldiers
have taken ordinary people for one ride after another.
Instead of a measured response, policy-makers have been flapping
about the countryside like chickens with their heads cut off.
Hardly a day has passed since the nuclear tests that the State Bank
has not come out with yet another circular, usually contradicting
an earlier one. But despite all their contortions, neither the
finance ministry nor the State Bank has been able to explain what
has happened to the ten billion dollars individuals and
corporations had deposited in banks. We know that our foreign
exchange reserves are now down to $800 million, so where did the
other nine billion dollars go?
Grim economic realities apart, one reason nobody trusts this
government and the banking system any more is the way cronies of
the kitchen cabinet had sent hundreds of millions of dollars abroad
before foreign exchange accounts were officially frozen. Pakistanis
here and abroad are understandably bitter over the fact that some
fat cats were deliberately allowed to make a killing, while
ordinary people's savings were eroded overnight. Imagine the plight
of young men and women studying abroad: suddenly the cost of their
education has jumped up by nearly a third. And this is just for
starters. Wait until the sanctions really start to bite.
Had the average IQ level of the ruling party been in triple digits,
they could have foreseen much of what is happening today. Before
pushing the nuclear button, a cost-benefit analysis could have been
worked out by an undergraduate student of economics.
Apart from the initial rush of testosterone, what have we gained by
testing? Certainly we have not enhanced our security; indeed, it
can be argued that by detonating what was probably a significant
part of our nuclear arsenal, we may have actually lowered our
defences. In the medium term, we have weakened our conventional
forces by making imported spares and equipment more expensive
through a falling rupee. Instead of isolating India and cashing in
financially and diplomatically by occupying the moral high ground
through refraining from following our bellicose neighbour's
example, we have lost the advantage we could have gained.
Even after testing, if we had immediately announced that we would
sign the CTBT unilaterally, we might have escaped the squeeze we
are caught in now. Our current standing in the international
community can be gauged by the extremely tough and undiplomatic
(but accurate) language used by the US State Department's assistant
secretary in describing this government's mishandling of the
economy.
In most countries, at the very least the finance minister would
have resigned after presiding over a disaster of such magnitude.
Here, the articulate but ineffectual Sartaj Aziz brings us messages
of hope from different capitals, but precious few hard commitments.
I understand that when the cabinet was debating whether to test or
not, he was among the most strident of hawks. To mix avian
metaphors, now that the chickens have come home to roost, will he
have the grace and sense of timing to step down? I doubt it very
much.
And our foreign minister is still clinging on despite having handed
in his resignation a couple of months ago. Had he left then, we
would have been spared his bizarre statements and analyses. His
priceless assessment that we would "win" a nuclear exchange with
India because our adversary's population was concentrated while
ours is dispersed deserves to be framed and displayed in the
National Defence College. Perhaps he forgot that Karachi has a
population of ten million, and Lahore has over five million people.
But the deed was done over six weeks ago, and we have to live with
the consequences of the follies of our leaders. But for how long,
oh Lord, for how long?
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980716
-------------------------------------------------------------------
The crisis and its imperatives
-------------------------------------------------------------------
M.B. Naqvi
PRIME MINISTER Nawaz Sharif and his government must have come to
two conclusions. The crisis that is engulfing the country has not
been caused by nuclear tests alone and that there is no single
cause for it except that the country has been consuming far more
than it produces and no one has thought of correcting this
imbalance.
All the mistakes committed in the past are now to be paid for.
Secondly, it is an altogether complex situation; there is no quick-
fix solution for it. So long as simplistic solutions continue to be
sought, the crisis will only become worse. It can even get out of
hand.
Talking of quick fixes, two highly unrealistic options are being
suggested. One is to surrender and offer to sign the NPT, CTBT and
all other instruments of a non-proliferation regime
unconditionally. If Pakistan does that no quid pro quo will be
forthcoming. The paid price will inevitably include doing without a
proactive Kashmir policy. After these prices have been paid, the
country will be required to go on bended knees before Washington
in which case it may get a bail-out. The bonanza might include
restructuring of the loans, perhaps even a scaling down of them and
certainly rescheduling of debt servicing for a spell of 3 to 5
years during which to get our act together. It may also include
some IMF and World Bank loans. But Pakistan is unlikely to
surrender like this, nor does US administration appear to be in a
mood to bail it out.
The second theoretical option is for Prime Minister Nawaz Sharif to
find a patron saint who will give us a loan of $15 to 20 billion
for 7 to 10 years during which it will not charge any interest nor
ask for repayment. With the help of this monetary reserve Islamabad
would try to discharge its current liabilities in the next two to
three years and regain confidence gradually after the initial
damage control and corrective steps. But this kind of loan giver is
hard to find. Prime Minister Nawaz Sharif did not seem to get even
petroleum and edible oils on deferred payments or some ad hoc
amounts to be kept with SBP from Arab brethren. No one seems to
have enough money these days.
So what remains? The first illusion is that we have to be bailed
out. No body is likely to do that for us. We have to bail ourselves
out. Nobody owes us either our survival or prosperity or a
reasonable consumption level. We have to develop and defend the
country ourselves with our own resources. Others' help for
development might be forthcoming but at a later stage. That stage
will come after we have initiated the process of true development.
If the process looks promising, along with the emergence of a
market of some size with a certain level of purchasing power and a
potential for growth, at that point others with lots of money might
want to join in. they will make investments for the sake of making
profits. The precise policy package we give them is of secondary
importance. If the potential for profits looks good and certain,
investors will try to overcome all the difficulties that
bureaucracy may place in their way.
All this talk of red tape hindering foreign investment is
exaggerated. If the country looks attractive, entrepreneurs and
investors would gate-crash and overcome all hurdles. Only the
prospects of profits should be attractive enough. But we cannot
bank on foreign investors. We have to start the process of growth a
new from scratch, treating the present crisis as the end of a
chapter. The first task may be to encourage capital formation among
the business class (and not feudals), as too much capital may have
gone out of the country.
The government should facilitate investment without any spoon-
feeding or too many incentives or concessions. Nascent industries
sometimes need protection. But that has to be limited and should
progressively diminish. We have to know how to plan an economy that
does not violate market principles altogether, even when we intend
diverging from the present paradigm of deregulation, privatization,
free trade and liberalization. We have just seen what
liberalization has done to our economy when other fundamentals were
not sound.
One question has not been discussed but is obvious. The kind of
things that Mr Sartaj Aziz has done since May 28 last had no chance
and indeed might blight the future. Given the present structure of
the economy, together with the policy package Pakistan adopted,
there is no likelihood of success. A wholesale restructuring of
economic policies as well as the very structure and orientation of
the economy is necessary. Even mian Nawaz Sharif and Mr Sartaj Aziz
have indicated that they have been forced into considering the
option of unilateral moratorium on debt servicing and to restrict
imports. This would violate all IMF rules and will simply be seen
as ad hoc policies that have been pursued since May last.
Taken in isolation, these initiatives too may fail to deliver
anything worthwhile. It will amount to going into a shell similar
to North Korea's or Burma's and shut off Pakistan altogether from
world markets. It can then only rely on barter or some version of
it. It would be unrealistic to expect substantial inflows except
from the captive expatriates who happen to have no option but to
remit money through the hawala channel. Can the government make a
success of this sort of economy?
In order to succeed in such an isolationist venture, the present
hoard of dollars and Pakistan rupees that the rich sections have
amassed will have to be rendered ineffective or brought out into
the formal economy. Demonetization will be an imperative. If the
fight against inflation is taken in hand with some determination,
demonetizations is again unavoidable. Whether a whole new economy
that does not violate the basic market principles and yet retains
socially egalitarian purposes is certainly a tall order and yet
real serious efforts have to be directed to that end without any
loss of time.
Again it is worth repeating there are no quick fixes for the ailing
and enfeebled economy. The only option one thinks is feasible is
that we do three or four things together, some of which have proved
unrealistic so far. Pakistan economy today should, for all
practical purposes, be seen as a boat that is sinking. Needles
ballast and other heavy cargoes have to be thrown overboard. It
means restricting public consumption to bare minimum. The primary
ballast that has to be shed is debt servicing. Unilaterally or
through negotiations, it has to be done, though ideally it should
be an agreed decision with at least IMF and the World Bank.
Likewise, the heavy spending on national security should be
slashed. Nothing counts in comparison with the goal of survival.
Even Kashmir or nuclear deterrence is secondary compared to the
challenge of the nation's economic and political survival.
Next, the charade that goes by the name of development has to be
ended. But to begin with, the existing vital industrial projects
that have a potential for growth and are of vital importance must
survive whether they remain in the public sector or pass into
private hands. But they should not require imported raw material
unless they be oil refineries and the like or direct imports of
vital commodities like foodstuffs, tea, petroleum and similar
commodities. All industries that require more imports than their
exports can pay for do not deserve to survive. They are a
deadweight and have to be closed down. What are vital for popular
consumption or for more agricultural and industrial production
should be not only retained but also strengthened and expanded. We
should aggressively carry out a three- or four- year stabilisation
programme.
A important point is Pakistan should stop looking for guarantees
for national security. For it to expect that the someone can help
us in getting Kashmir out of the Indian clutches is inherently
unsound. The rest of the world will not force India into handing
over Kashmir to Pakistan. The maximum that can ever be visualized
is India being forced to listen to what the Kashmiris say and say
unmistakably and unitedly. But the idea that someone can take
Kashmir out of Indian military hold for Pakistan is flawed.
These limitations should determine policy for Islamabad if it wants
to ride out the growing crisis. One has not dealt with the purely
political prerequisites of a policy of survival. But these are
crucially important: all sanctions and opinions have to be listened
to and carried along.
===================================================================
SPORTS
980715
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Zarak Jahan clinches Asian squash title
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KUALA LUMPUR, July 14: Top seed Zarak Jahan Khan of Pakistan
recovered to clinch the Asian squash title by three games to one
against the Malaysian second seed, Kenneth Low, in the final here
on Tuesday.
Zarak, who won the Asian title in 1994 here, lost the opening game
5-9 but clinched the match by taking the next three games in a row
9-6, 9-1, 9-1 against the young Malaysian.
In the all-Malaysian women's final, Nicol Ann David also dropped a
game before overcoming her compatriot Sandra Wu 9-2, 4-9, 9-6, 9-
1.Agencies
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980717
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Pakistan U-18 hockey team for German tour announced
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Reporter
LAHORE, July 16: An 18-member Pakistan under-18 hockey team was
announced here on Thursday after the conclusion of two-day trials
at the National Hockey Stadium.
The team is scheduled to leave for Lipzip on July 29 to play a
five-match international series against the German junior side and
return home on Aug 5.
Syed Sameer of Pakistan Customs has been named to captain the team.
Addressing a press conference at conclusion of a 75-minute meeting
of the national selection committee at the PHF headquarters, PHF
Secretary Col (retd) Syed Mudassar Asghar said that the team had
been chosen unanimously.
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980717
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National athletics trials on July 25
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Reporter
ISLAMABAD, July 16: Open trials to pick four-member Pakistan
track and field team for participation in XVI Commonwealth Games
will be held here on July 25 at Jinnah Stadium, Pakistan Sports
Complex.
The trials would start at 5.50 pm. Entries can be sent to Pakistan
Amateur Athletics Federation (PAAF), Jinnah Stadium, Islamabad.
After the trials the top winners would be selected in each
discipline. Khalid Mehmood, Sports Officer, WAPDA, has been named
manager of athletics squad for the C' Wealth Games to be held in
Kuala Lumpur from Sept 11.
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