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Economic reform agenda

promises turnaround

from crises: experts

ISLAMABAD: The new Economic Reform agenda, with stress on reining the burgeoning debt and restoring shattered investors' confidence, promises turn-around from the economic crisis rather than duping the people with gimmicks and jargons.

The package announced by the Chief Executive on December 15, is widely seen as comprehensive that not only identifies the problems, but also traces the underlying causes.

The Chief Executive listed over-spending by the government and an imblance trade as "basic reasons" for the sorry state of the country's economic affairs.

These two ills landed the country into a debt trap which is now nullifying every effort is made to put the economy back on rail.

Nearly 56 percent of the current budget is going towards debt-servicing. As on June 30, 1999, Pakistan total external debt was $38.8 billion, of which $6.2 billion is the short-term, putting country's foreign exchange reserves under severe strain.

The package is primarily geared to breaking the debt trap and putting the economy on the path of self-reliance.

The package does not harp on the populous slogans of "breaking the begging bowl". Rather, it calls for borrowing but "for productive purposes".

Similarly, the government has indicated to go for further debt rescheduling, if required, saying, it intends to divert the savings solely for poverty alleviation.

But at the same time, a resolute effort has been promised to lessen the debt burden, which has made it difficult to increase expenditure on education, health and other social sectors.

A high-level committee has been proposed to be constituted to suggest measures for the establishment of an efficient debt management system and to reduce the debt servicing burden.

However, the economic analysts believe " decision to re-activate the privatisation programme is perhaps the one that can really make a breakthrough in freeing country's debt-trapped economy".

The government has committed to use the privatisation proceeds exclusively for debt retirement.

It was unfortunate that similar promises were made in the past but were never fulfilled. Since the inception of privatisation, the govenrment sold units worth more than $1.5 billion but only a small portion of it was used for retirement of debt and the rest was spent elsewhere.

"The debt can be substantially reduced if the decision of using privatisation proceeds only for debt retirement is implemented in letter and spirit," the economic experts maintain.

The other main focus of the government is to generate economic activity through developing investors' confidence.

During the past two years, country's foreign investment has touched a bitter nadir, mainly on two accounts Ñ IPPs and freezing of FCAs Ñ which was candidly admitted by the Chief Executive in his December 15 speech.

"Nothing has damaged invetors confidence more than the ill-conceived decision of freezing the foreign currency accounts and needless entanglement with the Independent Power Prodcers," the Chief Executive said.

To right the wrongs, the Chief Executive has announced a number of decisions which would help restore the faith, investors had in this country earlier, that offered most conducive investment climate.

The Law Ministry has been directed to formulate legislative measures that would prevent the recurrence of events Ñ like freezing of accounts.

On the IPPs, the Chief Executive has asked the authorities concerned to expendite tariff negotiations with the remaining IPPs and finalise all pending investigations.

These decisions would certainly help to put these issues behind and make a new beginning in a bid to attract foreign investment.

Unlike past, the government has made it clear that there are hard decision to be taken and bitter pills to be swallowed.

"I cannot lead you up a garden path. Let us face the reality squarely and be prepared for sacrifices today for the sake of a better tomorrow," said the Chief Executive.

In this regard, economic experts believe, decisions such as farm tax, implementation of an across the board GST etc., reflect government's resolve to go for hard decisons rather than opting for populous schemes like yellow cab.

They also appreciate the focus of the government to revitalise agriculture sector, promote small and medium scale industries, encourage oil and gas exploration and develop information technology and software.ÑAPP