Tuesday, August 19, 2008

Musharraf's Economic Legacy


Regardless of the criticism of President Musharraf's politics or personality, there is general agreement among independent economists that, through his structural reforms and economic management, President Musharraf left Pakistan's economy in much better shape than he found it when he seized power in 1999.

Here are some of the key highlights of the results of Musharraf era economy:

1. Pakistan's tax base and government revenue collection more than doubled from about Rs. 500b to over Rs. 1 trillion.

2. Pakistan's GDP more than doubled to $144b since 1999.

3. Most recent figures in 2007 indicate that Pakistan's total debt stands at 56% of GDP, significantly lower than the 99% of GDP in 1999.

4. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. Contrary to accusations by Musharraf's detractors that it was an artificial consumer-led growth, it was really an investment-led boom that Pakistan experienced in Musharraf years.


5. In spite of the election-related political turmoil, Pakistan’s economy maintained its momentum in 2007, growing by 7%, slightly more than the 6.6% for 2006. Agricultural sector growth recovered sharply, from 1.6% in 2006 to 5% in 2007, while the manufacturing sector growth continued at 8.4% in 2007, slightly more moderate than the 10% for 2006. Services grew at 8% in 2007, down from 9.6% in 2006.


6. The strong consumer demand in Pakistan drove large investments in real estate, construction, communications, automobile manufacturing, banking and various consumer goods. Millions of new jobs were created. By all accounts, the ranks of the middle class swelled in Pakistan during Shaukat Aziz's term in office. According to Tara Vishwanath, the World Bank's lead economist for South Asia, about 5% of Pakistanis moved from the poor to the middle class in three years from 2001-2004, the most recent figures available. In 2007, analysts at Standard Chartered bank estimated that Pakistan has a middle class of 30 million which earns an average of about $10,000 per year. And adjusted for purchasing power parity (PPP), Pakistan's per capita GDP is approaching $3,000 per head.


7. The Karachi stock market surged ten fold from 2001 to 2007.

8. Pakistan positioned itself as one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.




9. Funding for higher education was increased five fold resulting in massive new enrollment of students and huge strides in research publications.

10. Pakistan is more egalitarian than its neighbors. The CIA World Factbook reports Pakistan’s Gini Index has decreased from 41 in 1998-99 to 30.6 in 2007-8, lower than India's 36.8 and Bangladesh's 33.2.

The Wall Street Journal did a story in September 2007 on Pakistan's start-up boom that said, "Scores of new businesses once unseen in Pakistan, from fitness studios to chic coffee shops to hair-transplant centers, are springing up in the wake of a dramatic economic expansion. As a result, new wealth and unprecedented consumer choice have become part of Pakistan's volatile social mix."

The one sore spot that sticks out in President Musharraf's and Shaukat Aziz's record is their lack of attention to the rising energy needs of the country. Appropriate planning should have comprehended new power plants to support growth forecasts. There were other mistakes as well, such as the decision to export wheat in 2007 that created shortages and price hikes that helped bring down the PML (Q) government and ultimately led to President Musharraf's departure.


Since the takeover by the PPP-PML(N) coalition, there has been a sharp decline in Pakistan's economy. Summing up the current economic situation,the Economist magazine in its June 12 issue says as follows:" (The current) macroeconomic disarray will be familiar to the coalition government led by the Pakistan People's Party of Asif Zardari, and to Nawaz Sharif, whose party provides it “outside support”. Before Mr Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. But since then, as the IMF remarked in a report in January, there has been a transformation. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October." Please read "Pakistani Economy Returning to the Bad Old Days".



The current government hailed the performance of Pakistan's economy under President Musharraf's watch as follows: "Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)



In addition to the improved economy, President Musharraf's policies enabled halving of poverty from 34% in 2000 to 17% in 2008, proliferation of independent radio and television stations, and an expanded middle class, which ultimately led to his downfall.

It was on "dictator" Musharraf's watch that Pakistan saw unprecedented deregulation of the mass media, prolific growth, and vibrant debate that had never occurred before him. None of the "democrats" or "dictators" who ruled before him gave such a gift to the people of Pakistan.

It is this media freedom that I think is Musharraf's best legacy that can not be easily denied or reversed. It'll serve Pakistan well by shining light on the misdeeds of Pakistan's leaders now, and in the future.

Here's a video titled "I Am Pakistan":



Related Links:

Haq's Musings

FDI in Pakistan

Video: Who Says Pakistan Is a Failed State?
Structural Reforms in Pakistan's Economy

President Musharraf Video Defense on Power Crisis

48 comments:

Anonymous said...

Musharraf was doing a good job under the circumstances,to modernize and raise the std of living in Pak.Its unfair to blame him for energy infrastructure.it needs a lot ofcapital right? The US sponsored democratization deal messed it all up.He also miscalculated that lawyers will take it lying down like before. He could have manipulated the evidence or give himself judicial oversight immunity by NRO than outright dismissing the judges.The Americans paid in millions for Al-queda and other operatives picked up by pak intelligence who where illegally taken out of pak. So it makes economic sense for a cash starved country.Its ridiculous and hypocritical to argue the human rights of those terrorists when those billions of aid could make a huge difference in terms of jobs and economic stability.

Riaz Haq said...

While acknowledging Musharraf's many accomplishments, I believe Musharraf was a flawed leader who made many mistakes, particularly in 2007 that led to his downfall. But he lasted 9 years. His current opponents, I believe, have many more flaws than Musharraf. They will not last as long as Musharraf did, but I hope democracy does take roots in Pakistan through the current chaotic process.

Anonymous said...

Seriously, i am feeling sad on his departure, he was a brave leader who faced crises both internally and externally, but now challenging period has been started for existing government, lets see that what government elected by people can do for them. :-)
Live Long Pakistan!!!

Anonymous said...

Pak Economy in 1999 was: $ 75 billion (Source)
Pak Economy in 2007 is: $ 160 billion (Source) and (Source)
Pak Economy in 2008 is: $ 170 billion (Source)



GDP Purchasing Power Parity (PPP) in 1999: $ 270 billion (Source)
GDP Purchasing Power Parity (PPP) in 2007: $ 475.5 billion (Source)
GDP Purchasing Power Parity (PPP) in 2008: $ 504.3 billion (Source)



GDP per Capita Income in 1999: $ 450 (Source)
GDP per Capita Income in 2007: $ 926 (Source)
GDP per Capita Income in 2008: $1085 (Source)



Pak revenue collection 1999: Rs. 305 billion (Source)
Pak revenue collection 2007: Rs. 708 billion (Source) and (Source)

Pak revenue collection 2008: Rs. 990 billion (Source)





Pak Foreign reserves in 1999: $ 1.96 billion (Source)
Pak Foreign reserves in 2007: $ 16.4 billion (Source) and (Source)
Pak Foreign reserves in 2008: $ 8.89 billion (Source)



Pak Exports in 1999: $ 8 billion (Source)
Pak Exports in 2007: $ 18.5 billion (Source)



Textile Exports in 1999: $ 5.5 billion
Textile Exports in 2007: $ 11.2 billion (Source)



KHI stock exchange 1999: $ 5 billion at 700 points
KHI stock exchange 2007: $ 75 billion at 14,000 points (Source)
KHI stock exchange 2008: $ 46 billion at 9,300 points (Source)



Foreign Investment in 1999: $ 301 million (Source)
Foreign Investment in 2007: $ 8.4 billion (Source)



Debt servicing 1999: 65% of GDP (Source) and (Source)
Debt servicing 2007: 28% of GDP (Source) and (Source)

Debt servicing 2008: 27% of GDP (Source)



Poverty level in 1999: 34% (Source) and (Source)
Poverty level in 2007: 24% (Source) and (Source)



Literacy rate in 1999: 45% (Source)
Literacy rate in 2007: 53% (Source)



Pak Development programs 1999: Rs. 80 billion (Source)
Pak Development programs 2007: Rs. 520 billion (Source)
Pak Development programs 2008: Rs. 549.7 billion (Source)


For sources: http://presidentmusharraf.wordpress.com/2008/07/01/economic-comparison-1999-2007-and-beyond/

Riaz Haq said...

Final resolution of Kashmir issue based on Musharraf's 4-point formula may, after all, turn out to be another positive legacy of the Musharraf rule.

Mirwaiz confirmed to the Indian Express in a recent interview that the four-point formula proposed by former Pakistani President Musharraf is being revived to try and settle the Kashmir issues. The Musharraf formula envisions soft or porous borders in Kashmir with freedom of movement for the Kashmiris; exceptional autonomy or "self-governance" within each region of Kashmir; phased demilitarization of all regions; and finally, a "joint supervisory mechanism," with representatives from India, Pakistan and all parts of Kashmir, to oversee the plan’s implementation.

“India is not ready for the joint-management part of the proposals which talk about joint control of foreign affairs, currency and communications in Kashmir,” Mirwaiz told the Indian Express. “There’s a broader agreement on the other aspects of this settlement model”.

http://www.riazhaq.com/2009/11/chinas-growing-stature-in-south-asia.html

Riaz Haq said...

President Asif Zardari's total assets are estimated at $1.5 billion, according to a NAB filing with Pakistan Supreme Court, reports the News:

ISLAMABAD: The National Accountability Bureau (NAB) on Tuesday submitted in the Supreme Court the list of the NRO beneficiaries, which showed President Asif Ali Zardari possessing assets worth $1.5 billion (Rs 120 billion) abroad and worth Rs 24.14 billion in the country.

Deputy Prosecutor General Abdul Baseer Qureshi presented the list of 248 NRO beneficiaries before the full court, hearing the petitions challenging the infamous ordinance, promulgated in 2007 giving legal cover to the corruption of politicians and bureaucrats

A 17-member bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, had directed the NAB the other day to submit authentic details of the NRO beneficiaries. According to the list, there are at least seven abolished references against President Zardari. The list indicates that the assets of President Asif Ali Zardari in foreign countries stand at $1.5 billion, including houses and bank accounts in Spain, France, the US and Britain while his assets in the country stand at Rs 24.14 billion.

In the list, President Zardari’s assets worth Rs 22 billion were mentioned as beyond means and the cases in this regard were withdrawn by the Accountability Court on March 5, 2008, under the controversial NRO.

Similarly, cases of corruption of Rs 268.3 million regarding the purchase of Ursus Tractors (Awami Scheme) and illegal construction of the polo ground at the PM House at the cost of Rs 52.297 million were terminated under the NRO in March 2008.Likewise, the list also includes allegedly causing loss of Rs 1.822 billion to the national exchequer by President Zardari by granting licence to the ARY Gold. The said case was also terminated under the NRO ordinance.

The NAB deputy prosecutor general told the court that information regarding the misuse of authority in affairs of SGS PSI Company by Asif Ali Zardari as well as illegal award of contract to Cotecna for pre-shipment was being collected.

The NAB list included names of Interior Minister Rehman Malik, Pakistan’s Ambassador to United States Hussain Haqqani, Defence Minister Chaudhry Ahmed Mukhtar, former NWFP chief minister Aftab Sherpao Khan, ex MNAs Nawab Yousaf Talpur, Anwar Saifullah Khan, Sardar Mansoor Leghari, Haji Nawaz Khokhar, Pir Mukarramul Haq, Brig (retd) Imtiaz, Usman Farooqi, Salman Farooqi, former president Habib Bank Younus Dalmia, Mirbaz Khetran and many others.

He submitted that the National Assembly’s standing committee approved the NRO, however, the concerned minister took it back from the assembly. During the proceedings, advocates general of the Punjab, the NWFP and Balochistan informed the court that under Section 2-A of NRO, no review boards were constituted in their respective provinces to decide the murder cases.

Advocate General Sindh Yousaf Leghari, however, informed the court that 8,000 cases were dropped under the NRO in Sindh, of which 3,000 were murder cases. He sought time to provide details of the cases decided under Section 2-A of the NRO in Sindh. The court directed the AG Sindh to submit report before the court today (Wednesday).

Abdul Hafeez Pirzada, counsel for Dr Mubashar Hassan, submitted the ordinance as whole was void because it was a fraud ordinance as it violated many substantial provisions of the Constitution.

He submitted that reconciliation meant reconciliation between husband and wife, between parents but this National Reconciliation Ordinance had trampled the rights of the entire nation. Pirzada contended that all stakeholders were not taken into confidence before its promulgation. “The nation is threatened with fragmentation,” Pirzada maintained.

Riaz Haq said...

The corruption of Pakistani politicians is exceeded only by their incompetence. With economy in virtual recession, the FDI is dropping as reported by The News:

Thursday, December 17, 2009
KARACHI: Net foreign investment in Pakistan fell 25.6 per cent to $1.08 billion in the first five months of the 2009/10 fiscal year compared with $1.45 billion in the same period a year earlier, the central bank said on Wednesday.

Out of total foreign investment, foreign direct investment fell 52.2 per cent to $774.0 million in the first five months of the fiscal year which began on July 1 from $1.62 billion for the same months last year, the State Bank of Pakistan said.

But foreign portfolio investment flows reversed, with a $311.3 million inflow in the July to November period compared with an outflow of $162.9 million in the same period last year.

Authorities imposed a floor on the Karachi Stock Exchange benchmark index in August last year as political uncertainty and economic and security worries drained investor confidence.

The floor discouraged new investment and also led to a sharp outflow of funds, as foreign investors sold holdings in off-market trade.

The floor was removed in December. The International Monetary Fund (IMF) saved Pakistan from a balance of payments crisis with a $7.6 billion emergency loan package in November last year. The loan was increased to $11.3 billion on July 31.

Pakistan’s economy is in virtual recession as gross domestic product growth in the 2008/09 fiscal year of 2 per cent is about the same as population growth. The IMF has projected GDP growth flat at 2 per cent this fiscal year.

Security concerns over a Taliban insurgency based in the country’s northwest and chronic power shortages have also put off investors.

Riaz Haq said...

Here's a ranking of ease of doing business in South Asia that puts Pakistan well ahead of India:

Bangalore: The business environment in Pakistan and Bangladesh is far better than in India. According to the latest 'Doing Business Index', India's business environment has become tougher during the years compared to other nations.

Economies are ranked from one to 183 on the basis of their regulatory environment being conducive to business operations. All of India's neighbors except Afghanistan have been ranked better. While India is ranked 133, Pakistan is ranked 85th followed by Sri Lanka (105), Bangladesh (119) and Nepal (123).

"India is a consistent reformer for the past many years. A country's rank in the index is an average of 10 indicators, each with 10 percent weight in the index. India increased the number of judges in the specialized debt recovery tribunals, which led to a major removal of blockages. While India reformed in the area of insolvency, other countries reformed in more than one area," World Bank's Senior Strategy Advisor, Dahlia Khalifa told Economic Times explaining why India has been overtaken by other nations.

The 2010 Doing Business Report prepared by World Bank and the International Finance Corporation averages a country's percentile ranking on 10 topics, made up of a variety of indicators. This includes examining a country's business environment in terms of starting a business, dealing with construction permit, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

The first place is occupied by Singapore, which is followed by New Zealand, Hong Kong and the U.S.

To see complete rankings and report, click here: http://www.doingbusiness.org/EconomyRankings/"

Riaz Haq said...

Here's a Dawn story about the duplicity of Pakistan's "democratic leaders" published Jan 16, 2009:

ISLAMABAD: While publicly it criticizes former President Musharraf for the present economic mess, the government in its official documents has appreciated the economic policies of the previous regime that became a strong base for seeking loans from multilateral donors and friends of Pakistan.

The PPP-led coalition partners have been blaming Musharraf regime in public speeches for fudging economic figures to paint a rosy picture, while its overall policies pushed the country into economic crisis.

The letter of intent (LoI), on the basis of which, Pakistan sought the much-needed $7.6 billion bailout package from the International Monitory Fund (IMF), has bit by bit appreciated the Musharraf policies since 2000.

During the past one decade (1999-2007), the LoI says Pakistan’s economy witnessed a major economic transformation from substantial increase in the volume of gross domestic product (GDP) to greater international trade.

Talking to Dawn on Thursday former Finance Minister Ishaq Dar said whatever he said about the health of economy was based on the balance sheet existed on March 31, 2008. He said the balance sheet was dully approved by the then cabinet headed by Prime Minister Syed Yousuf Raza Gilani.

He said no body denied the contents of the balance sheet. The focus of the previous economic policy was on promotion of consumerism without supporting the industrial base.

Apparently not willing to agree with the LoI contents, he said though he has a different view of the past economic growth but quickly added the same was destroyed in the last 15 months of the military led dictator.

An official source requesting not to be named said the economic wizards in the finance ministry are not politicians to make only speeches but they have to look into ground realities. ‘We reported to IMF whatever is factual and based on evidence,’ the official added.

The LoI said the country’s real GDP increased from $60 billion in 2000-01 to $170 billion in 2007-08 with per capital income rising from under $500 to over $1000. During the same period, the volume of international trade increased to nearly $60 billion from $20 billion.

For most of this period, real GDP grew at more than 7 per cent a year with relative price stability. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Buoyant output growth, low inflation, and the government’s social policies contributed to a reduction in poverty and an improvement in many social indicators.

Former Finance Minister Dr Salman Shah told this scribe the government has made the 170 million people fool while telling them pack of lies in the past nine months about the economic policies of the Mushrraf regime.

He said that as the present government acknowledged in black and white, the impressive past growth made their way easier to make access to the new facility of the IMF for emerging markets hit by the crisis to support the balance of payment problems.

Had growth not been achieved, Pakistan would have to apply for other long term IMF financing facilities like poverty reduction, structural adjustments etc, Shah said adding government should tell truth to the nation if they have confidence.

‘The recruitment made so far for running the finances of this country is very depressing. This shows this government has neither commitment nor capabilities to take the country out of the current crisis,’ Dr Salman said.

Riaz Haq said...

The economic results of the decade of 1999-2009 speak much louder than any denials of the reality by the naysayers and Mush bashers, who are highly politicized but mostly clueless about good governance, economy, investing and business.

They are unaware of the best kept secret that Pakistani markets significantly outperformed those in the much hyped BRIC nations by a wide margin.

Pakistan's key share index KSE-100 was just over 1000 points at the end of 1999, and it closed at over 9727.40 on Dec 31, 2009. Pakistan rupee remained quite stable at 60 rupees to a US dollar until 2008, slipping only recently to about 80 rupees to a dollar. In spite of the currency decline, Pakistan's KSE-100 stock index surged 55% in 2009 in US dollar terms and 65% in rupee terms, after the IMF bailout that forced the current government to acknowledge the good policies and achievements during Musharaf years.

During the same period of 1999-2009, Mumbai Sensex index moved from just over 5000 points to close at 17,464.81. If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $900 today, while $100 invested in the Mumbai's Sensex stocks would be worth $274. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999, would get you about $262 today, while $100 invested in the S&P500 would be worth $91.

Pakistan's KSE-100 stock index surged 55% in 2009 in US dollar terms and 65% in rupee terms, in a year that also saw the South Asian nation wracked by increased violence and its state institutions described by various media talking heads as being on the verge of collapse. Even more surprising is the whopping 825% increase in KSE-100 from 1999 to 2009, which makes it a significantly better performer than the BRIC nations. BRIC darling China has actually underperformed its peers, rising only 150 percent compared with energy-rich Brazil (520 percent) and Russia (326 percent) or well-regulated India (274 percent), which some investors see as a safer and more diverse bet compared with the Chinese equity market, which is dominated by bank stocks. This is the kind of performance that has got the attention of some of the top investors and investment firms around the world.

While such obviously breath-taking results may not mean much to those determined to deny the achievements of a "dictator", they are not lost on smart investors, like those at Goldman Sachs and Franklin Templeton, both of whom are bullish on Pakistan, in spite of its current difficulties. Musharraf's legacy will live on with the investors' faith in Pakistan.

http://www.riazhaq.com/2010/01/karachi-tops-mumbai-in-stock.html

Riaz Haq said...

Dr. Ashfaque H. Khan, Dean of NUST Business School, has written a guest post on this blog. Here are some excerpts from it:

" Pakistan positioned itself as one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.

The present government inherited a relatively sound economy on March 31, 2008. It inherited foreign exchange reserves of $13.3 billion, exchange rate at Rs62.76 per US dollar, the KSE index at 15,125 with market capitalization at $74 billion, inflation at 20.6 per cent and the country's debt burden on a declining path. The government itself acknowledged in the same document that "the macroeconomic situation deteriorated significantly in 2007/08 and the first four months of 2008/09 owing to adverse security developments, large exogenous price shocks (oil and food), global financial turmoil, and policy inaction during the political transition to the new government". (Para 3 of the MEFP, November 20, 2008)"

Riaz Haq said...

Here's an interesting view of Pakistan democracy by Ahmad Qureshi:


FAKE DEMOCRATIC WARRIORS: (Gen Faiz Ali) Chishti said that “Several (democratic) champions became leaders while sitting in the laps of army generals.” He listed them as follows:

1. Zulfiqar Ali Bhutto, former Prime Minister of Pakistan [Benefactor: Field Marshal Ayub Khan].

2. Nawaz Sharif, former Prime Minister of Pakistan [Benefactor: Gen. Zia-ul-Haq]

3. Altaf Hussain, the exiled British-Pakistani leader of MQM [Benefactors: Gen. Zia-ul-Haq and Gen. Pervez Musharraf]

4. Jamaat Islami [Benefactors: Gen. Zia-ul-Haq and Gen. Pervez Musharraf]

The irony is that all of them claim that Pakistan’s military should not be involved in major internal decisions when necessary but they never explained why they accepted military help in ascending to power in the first place. Interestingly, despite being discredited as failed and inept, these politicians keep getting second and third chances thanks to the military’s failure to introduce real reforms after every coup. [Also thanks to frequent US and British meddling in our politics for their own objectives. Unfortunately, the Pakistani military has so far been unable to prevent it and, under Musharraf, even took it to new heights!]

Moreover, Pakistani military has maintained an unwritten alliance with this failed political elite, always handing power back to it after every intervention without any attempt to open doors to middle- and lower-class Pakistanis to participate in running their country, especially when they have proven to be more creative in taking Pakistan forward in many areas.

One example is Gen. Musharraf, who came to power with a promise to inject new faces into a stagnant system. Eight years later, he not only failed to do that but ended up restoring some of the worst failed politicians back to power as his replacement. The only credible new political face from the late Musharraf period is Member of National Assembly Marvi Memon. To be fair to her, she was a late entrant who proved her mettle on her own in the two-and-a- half years since Musharraf’s departure. With her patriotic and inclusive views, a large segment of Pakistan’s younger generation identifies with her. But she stands no chance of moving up in a system designed to keep people like her from exercising real power.

THE LOOPHOLE: Mr. Chishti pointed out another irony that exposes the duplicity of the present political elite in Pakistan. An independent Election Commission is what stops military interventionists from legitimizing their rule. So if someone wants to stop future military interventions being endorsed by the country’s courts and parliaments, creating such an independent election commission is the first step. But strangely, despite all the noise over the recent constitutional amendments, called the 18 th Amendment, none of the political parties pushed for an independent election commission. The reason is that an independent election commission would also enforce democracy within the parties, challenging lifetime party presidents and ‘chairpersons’.

COUP DECISION INSTITUTIONAL: He said the decision to impose military rule, or Martial Law, is never a personal decision of one man but a collective one of the Army High Command and is a result of full spectrum assessment of the state of the nation.

WHY MILITARY INTERVENES: Since a military coup is not a one-man-show and hence there is no question of personal ambition, then the right question to ask, says Mr. Chishti, is ‘Why the military intervenes?’ He suggests that tackling the reasons would reduce the possibility of such interventions.

Wise words. But they are falling on deaf ears. The mother of all ironies is that when Pakistan Army has a chief who has gone out of his way to support democracy, and even rescued it on a couple of recent occasions, Pakistan’s democratic warriors are leading the country to a grand national failure of epic proportions with their failure to perform.

Riaz Haq said...

Here's a recent excerpt from a piece by Dawn columnist Irfan Husain about Pakistan's middle class influencing nation's politics:

While external debt increased from $39bn in 1999 to $50bn in 2009, poverty levels have fallen by over 10 per cent since 2001. Indeed, there are now around 30 million Pakistanis who are considered to be in the middle class with an average income of $10,000 annually, while some 17 million are now bracketed with the upper and upper-middle classes.

Even though this does not approach China’s and India’s spectacular progress in this period, it does represent a solid advance. If one factors in the political turmoil the country has gone through, together with its ongoing insurgencies in the tribal areas and Balochistan, Pakistan’s progress has been impressive by any standard.

How do these numbers translate into day-to-day life in Pakistan? To examine the social transformation the country is undergoing, Jason Burke uses the Suzuki Mehran as a yardstick to measure change. In his ‘Letter from Karachi’ published in the current issue of Prospect, the Guardian reporter writes:

“In Pakistan, the hierarchy on the roads reflects that of society. If you are poor, you use the overcrowded buses or a bicycle. Small shopkeepers, rural teachers and better-off farmers are likely to have a $1,500 Chinese or Japanese motorbike…. Then come the Mehran drivers. A rank above them, in air-conditioned Toyota Corolla saloons, are the small businessmen, smaller landlords, more senior army officers and bureaucrats. Finally, there are the luxury four-wheel drives of ‘feudal’ landlords, big businessmen, expats, drug dealers, generals, ministers and elite bureaucrats. The latter may be superior in status, power and wealth, but it is the Mehrans which, by dint of numbers, dominate the roads.”

This growing affluence has already caused a major power shift, with the urban population now having a bigger say after years of being ruled by feudal landowners. As urbanisation gathers pace, Pakistan’s traditional power elite will increasingly come from the cities, and not from the rural hinterland. This will have a profound impact not just on politics, but on society as a whole. As Burke observes in his Prospect article:

“Politically, the Bhutto dynasty’s Pakistan People’s Party, mostly based in rural constituencies and led by feudal landowners, will lose out to the Pakistan Muslim League of Nawaz Sharif with its industrial, commercial, urban constituency. Culturally, the traditional, folksy, tolerant practices in rural areas will decline in favour of more modernised, politicised Islamic strands and identities. And as power and influence shifts away from rural elites once co-opted by colonialism, the few elements of British influence to have survived will fade faster.”

Often, perceptive foreigners spot social trends that escape us because we are too close to them to see the changes going on around us. For instance, Burke identifies the shift away from English, and sees ‘Mehran man’ as urban, middle class and educated outside the elite English-medium system. He sees Muslims being under attack from the West, and genuinely believes that the 9/11 attacks were a part of a CIA/Zionist plot. Actually, my experience is that many highly educated and sophisticated people share this theory.

Burke continues his dissection of the rising Pakistani middle class: “Mehran man is deeply proud of his country. A new identification with the ummah, or the global community of Muslims, paradoxically reinforces rather than degrades his nationalism. For him, Pakistan was founded as an Islamic state, not a state for South Asian Muslims. Mehran man is an ‘Islamo-nationalist’. His country possesses a nuclear bomb….”

Riaz Haq said...

Pakistan is more urbanized with a larger middle class than India as percent of population. In 2007, Standard Chartered Bank analysts and SBP estimated there were 30 to 35 million Pakistanis earning more than $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.

As to India's much hyped middle class, a new report by Nancy Birdsall of Center for Global Development says it is a myth. She has proposed a new definition of the middle class for developing countries in a forthcoming World Bank publication, Equity in a Globalizing World. Birdsall defines the middle class in the developing world to include people with an income above $10 day, but excluding the top 5% of that country. By this definition, India even urban India alone has no middle class; everyone at over $10 a day is in the top 5% of the country.

This is a combination both of the depth of India's poverty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.

Riaz Haq said...

Here's IEMR research report forecasting 135 million mobile phone subscribers in Pakistan by 2014:

(M2 PressWIRE Via Acquire Media NewsEdge) Vancouver, -- IE Market Research Corp. (IEMR), the Canadian-based provider of market intelligence services, announced today the release of its 1Q.2010 Pakistan Mobile Operator Forecast, 2009 - 2014.

"The wireless penetration rate is still low in Pakistan at approximately 60% in 2009, and we expect that the country's wireless market will continue to show strong growth. Our model forecasts that total mobile subscribers in Pakistan will increase from 96 million in 2009 to 134.8 million in 2014," said Nizar Assanie, Vice President (Research) at IEMR. "Mobilink will continue to be the largest player in Pakistan's mobile operator space over the next five years. We expect that Mobilink will have 36 million mobile subscribers in 2014. Also, given the latest quarter numbers, our model predicts that Ufone will have 25.8 million, Telenor will have 29 million, and Warid will have 25.3 million mobile subscribers by the end of 2014." "ARPU levels remain low in Pakistan's mobile operator space. We expect that the industry average ARPU will remain in the range of US$ 2 - US$ 3 over the next five years. Our model predicts that, in 2014, Mobilink's monthly ARPU will be at highest among operators at US$ 2.64. The operator with the lowest monthly ARPU will be Warid Telecom with US$ 1.67 in 2014," said Mr. Assanie.

IEMR's Pakistan Mobile Operator Forecast covers up to 50 financial and operational metrics on wireless operators in Pakistan - Mobilink (Pakistan Mobile Communications Limited), Ufone GSM, China Mobile Ltd. (Zong, formerly Paktel), Instaphone, Telenor ASA, and Warid Telecom International. Notable highlights of the 1Q10 Pakistan Mobile Operator Forecast include: * In terms of shares of total subscribers, we expect that Mobilink's market share will decline over the next five years, from 30% in 2009 to 26.7% in 2014. On the other hand, we expect China Mobile Pakistan's market share to increase from 8% in 2009 to 13.7% in 2014. We also forecast that market shares at Ufone, Telenor, and Warid will be approximately 19.2%, 21.6% and 18.8% respectively in 2014.

* Given the excellent performance by Norway's Telenor in Pakistan's wireless market in the recent past, our model forecasts that its EBITDA margin (calculated as EBITDA / reported revenue) will be increasing from about 23% in 2009 to 35% in 2014. On the other hand, we think that Mobilink will maintain its EBITDA margin of approximately 35% over the forecast period, 2010 - 2014.

Riaz Haq said...

The western media coverage of Pakistan is almost always one dimensional, and sometimes downright venom-filled, as the piece (and its accompanying illustration of scorpion) from the Economist titled "Land of the Impure" shows in abundance. Here is an excerpt from it:

THREE score years and a bit after its founding, Pakistan—which means land of the pure—still struggles to look like a nation. Economically backward, politically stunted and terrorised by religious extremists, it would be enough to make anyone nervous, even if it did not have nuclear weapons. For these shortcomings, most of the blame should be laid at the door of the army, which claims, more than any other institution, to embody nationhood. Grossly unfair? If the army stood before one of its own tribunals, the charge sheet would surely run as follows:

One, a taste for military adventurism on its “eastern front” against giant India, which has undermined security, not enhanced it. No adventure was more disastrous than the one in 1971, which hastened the loss of East Pakistan, present-day Bangladesh. More recently, in 1999, General Pervez Musharraf, then army chief, sent troops into Indian-controlled Kashmir without deigning to inform the prime minister, Nawaz Sharif. Mr Musharraf thus forced a confrontation between two nuclear states. It was an international public-relations debacle for Pakistan. Today the army remains wedded to the “India threat”. India, meanwhile, for all its gross abuses in Kashmir, is more concerned about economic development than invading Pakistan.

Two, endangering the state’s existence by making common cause with jihadism. This policy started with General Zia ul-Haq’s “Islamisation” policies in the late 1970s. After the Soviet Union invaded Afghanistan in 1979, Pakistan (along with the CIA) financed the Afghan mujahideen opposition. The policy turned into support for the Taliban when the movement swept into power in the mid-1990s. Taliban support continues today, even though Pakistan is America’s supposed ally in Afghanistan’s anti-Taliban counterinsurgency. A new report by the London School of Economics claims that not only does Pakistan’s Inter-Services Intelligence (ISI) spy agency finance the Afghan Taliban, but the ISI is even represented on the Taliban’s leadership council. The claims have been loudly rejected, but in private Pakistani military men admit that corners of the army do indeed help the Taliban.

For years both Islamist and liberal generals have also backed jihadists fighting for a Muslim Kashmir. Though vastly outnumbered, the militants have managed to tie down a dozen Indian army divisions. Mr Musharraf and an aide once joked about having such jihadists by their tooti—ie, literally, “taps”, by which he meant their private parts.

Riaz Haq said...

A recent ODI report highlighting India's progress toward MDGs and putting India in the top 20.

Looking at the detailed report, however, it clearly highlights Pakistan along with China in the top 10 in achieving poverty reduction goal MDG1, the most important of MDGs. There is no mention of India on this list in table 4.

http://www.odi.org.uk/resources/download/4908.pdf

Riaz Haq said...

A pre-requisite for a responsive and accountable democracy is a substantial middle class population.

An ADB report on Asia's rising middle class released today confirms that Pakistan's middle class now is 40% of the population, significantly larger than the Indian middle class of about 25% of its population.

The other significant news reported by Wall Street Journal today says the vast majority of what is defined as India's middle class is perched just above $2 a day.

Most of this middle class growth in Pakistan occurred on Musharraf's watch.

Riaz Haq said...

Here is a Daily Times report on inflation in Pakistan:

In Pakistan, 2007, the rate of inflation was 12.5 percent, during 2006-07 it was 21 percent and in July-March 2010 the inflation has been 11.3 percent. The cumulative rate of inflation was 44 percent in three years, from September 2007 to September 2010.

The main reason of food prices inflation was the increase in wheat, petroleum products, electricity and gas responsible to an overall increase in prices. The rising interest rate, high remittances and depreciation of rupee against dollar also fueled the inflation. This situation directly hit the poor and increased poverty level in the country.

A shortfall in the production of some essential commodities also raised food prices. There are 13 food items in essential items’ list which also includes wheat and flour; sugar, poultry, mash pulse, meat, milk, tea, fresh vegetables etc, that account for almost 23 percent of the total weight in the Consumer Price Index (CPI). Prices of food items in general have made food dearer in Pakistan. For instance, the average price of sugar has risen above 41 percent, wheat prices by 17 percent, chicken 24 percent, beef 13 percent and onion prices by 64 percent since July 2008 over April 2009. With a 23 percent weight in CPI, the contribution of these few items to the overall CPI inflation was 18 percent.

Although the world price of sugar has fallen unexpectedly since its peak in January 2010, but it is still up 21 percent year on year (YoY) basis. Dairy prices, on the other hand, have continued to raise their upward march.

Global price increase enhanced inflation sharply and Pakistan has no exception that has affected both globally as well as domestically. India’s food price inflation soared to 19.2 percent in December 2009, 16.7 percent in March. Similarly, food inflation in Bangladesh rose from 3.3 percent in July 2009 to 10.9 percent in February 2010.

Poverty ratio in Pakistan is rapidly rising due to economic slowdown; high inflation and reduction in subsidies compel 40 percent people of the country to lives around the poverty line, as per SBP estimates.

The country’s population has jumped to 184 million in 2010, 119 million in 1990, of which 73 million Pakistanis have fallen below poverty line, SBP said. The poverty level during 2010 rises by 4 percent to 40 percent, from 36.1 percent in 2009.

In the case of Pakistan, the increase in domestic prices of essential commodities remained relatively quiet as compared to the international price movements. However, since January 2010, international prices for some of the commodities like petroleum have fallen more rapidly than in Pakistan.

Riaz Haq said...

Here's Pakistani economist Dr. Ashfaque H. Khan writing about "Pakistan: a forgotten economy" in a piece published by The News:

How has that economy been transformed into a forgotten one in just three years? Unfortunately, the economy never featured on the radar screen of the present government. Additionally, the government lacked a credible economic team. In less than three years there have been four finance ministers, four finance secretaries and three governors of the State Bank.

The government wasted time and energy in downplaying the achievements of the previous government, while it lurched from one crisis to another, a rudderless ship with no sense of direction and purpose. The current economic team is weak and lacks the capacity to handle the multidimensional challenges it is confronted with, most of which are self-created.

The country’s economic growth has slowed to an average of three per cent per annum, and unemployment and poverty have risen. Higher double-digit inflation has persisted and items of basic necessity have gone beyond the reach of the common man. The debt burden has reached unsustainable levels and the dependence on donors has grown. Clearly, three years of mis-governance and poor economic management have brought the economy to near-standstill. People have lost confidence in the country’s ability to recover from the ever-deepening economic crisis. The recent unprecedented floods have further aggravated the impact of the economic ills.

It is not only the economy which is in decline. This is true of things in every walk of life. To name just a few, this has been evident in the game of cricket, the inaugural parade at the Commonwealth Games, the Haj operations, the creation of the sugar crisis, the running of public-sector enterprises like PIA, Pakistan Railways, the Steel Mills, National Insurance Corporation and TCP, the crisis in higher education, the deterioration in law and order and the debacle of the recently concluded Pakistan Development Forum (PDF).

The PDF meeting requires special mention. The PDF, the reincarnation of the Aid to Pakistan Consortium, is jointly chaired by the World Bank and the Government of Pakistan, represented through its finance minister. The purpose of this forum is to provide a platform to the government where it can present its economic and social reforms agenda before visiting delegations. The PDF has never been a platform for pledging assistance. Unfortunately, this forum was transformed into a pledging forum because every minister, even the prime minister, made statements about the financial loss caused by the floods and asked for financial support. The minister of interior even pleaded for a debt write-off.

It is unfortunate that we have turned every international forum, including Friends of Democratic Pakistan (FODP), into an opportunity for begging. No self-respecting nation begs forever. A beggar cannot command respect in the comity of nation. Continuing to do so, Pakistan risks nothing less than global oblivion. How long can we keep on begging like this? Is this the fate to which the people of Pakistan must resign themselves?

Riaz Haq said...

Here are excerpts from a report on Pakistan's retail sector:

The ongoing shift in population from rural to urban areas has underpinned the expansion of the retail sector. Strong real GDP growth until fiscal year 2006/07 (July-June) provided the foundation for years of double-digit growth in net retail sales in US dollar terms. However, net retail sales contracted by 1.2% in 2008. Sales then grew by only 5.7%, to US$75bn, in 2009, as the inflationary surge of 2008, which reduced spending power, abated only moderately. In local-currency terms retail sales growth in 2009 is estimated at 22.7%, owing to depreciation in the value of the Pakistan rupee against the US dollar. A gradual shift towards more formal retail facilities will facilitate the expansion of sales in 2012-14, but this process will be slow and confined to urban areas. (In 2010-11 retail sales expansion will be subdued, as overall private consumption growth slows sharply owing to the catastrophic floods that struck Pakistan in August-September 2010. Electronic retailing is almost non­existent in Pakistan because of the low levels of Internet penetration and credit-card use in the country.

Consumer finance accounted for 4.2% of the total stock of credit in the country in June 2010, according to the State Bank of Pakistan (SBP, the central bank). Credit for purchases of consumer durables was down by 25% year on year..... Because of their limited financial resources, most retailers sell on a cash-only basis. This is gradually changing, and credit-card use is likely to become an increasingly important element of personal finance in the long term. However, in the short to medium term credit-card use will be constrained by the poor economic climate: outstanding credit-card loans were down by 25% year on year in June 2010. Large, centralised shops have not been popular in Pakistan, as low levels of car ownership mean that people prefer "corner shops" near their homes. More importantly, frequent and often prolonged power failures reduce the advantages of refrigeration, leading to a preference for fresh goods bought for immediate consumption from neighbourhood retailers. Online retail sales are negligible, owing to the country's extremely low levels of Internet penetration and credit-card ownership and the absence of Internet merchant accounts to facilitate online credit-card transactions.

The retail market is highly fragmented and underdeveloped. There are over 125,000 retail outlets across the country, according to the Small and Medium Enterprise Development Authority, but around 95% of these are tiny corner shops. The few supermarkets that exist are concentrated in Karachi and Lahore. USC is the largest supermarket chain by far, with 5,850 outlets throughout the country in 2009, according to Planet Retail, an international industry consultancy. The other major chains are Whitbread (with 17 outlets in 2009), GNC (with six outlets), Metro (five outlets) and Carrefour (one outlet). However, even USC's market share is virtually insignificant in terms of retailing as a whole, according to Planet Retail, accounting for only 1.2% of total grocery spending in the country. The vast majority of retailers in Pakistan are small family-run shops, and this will remain the case throughout the forecast period (2010-14).

Riaz Haq said...

Here are some excerpts from an interesting Op Ed by Prof Lev Ginsburg on democracy in developing world, as published in Aljazeera English:

The basic reason for democracy's lack of solutions to such problems (poverty, economic disparity) is that its principles have been formulated in industrialised capitalist societies characterised by considerable cultural homogeneity and relatively small economic gaps.

Democracy is a set of formal principles developed in Western Europe with the aim of facilitating the representation and articulation of the middle and working classes and designed to contain peacefully the conflicts between them and the upper class.

In the absence of a balance of power between classes, and a consensual unifying national identity, the automatic installation of formal democratic principles might only make matters worse.
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When there is a systematic link between cultural identity and economic status, democracy becomes a problem, rather than a solution. It exacerbates cultural conflicts to the point of violence, because it provides a formal opportunity for the majority to force their will on the minority.

Political sociologist Michael Mann has shown that in these cases democracy only serves to intensify conflicts among racial and ethnic groups, to which I would add, in the Middle Eastern context, the conflict between confessional groups and between the religious and the secular.
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The oldest case, mind you, is the US - the cradle of the democratic constitution which announced a "government of the people" and began the massacre of the American indigenous people because they were not considered part of "we, the people" of America.
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Whoever wants democracy under these conditions must first come up with a creative and consensual formula, according to which each cultural group would be free to live its unique cultural life without attempting to force its identity and customs on the entire citizen body.

In other words, demonstrating for democracy is not enough. What the countries of the Middle East require is political consensus on mutual recognition of rights and coexistence, guaranteed by a constitution and institutionalised by electoral procedures and representative institutions.

Egypt does have to worry, however, about economic inequality and the severe daily hardships suffered by most of its population. Without providing solutions to these problems, even the most democratic regime can be toppled by massive protests, possibly leading to new forms of dictatorship. A good example of such a failure of democracy was December 2001 in Argentina, when the masses flooded the streets calling for "all politicians to go home" and toppling five presidents in a row.

This happened only two years after democratic elections swept a broad leftwing front to power, which had promised to bring the country out of its deep economic crisis, but failed. The elected government pursued the policy dictated by the International Monetary Fund (IMF), which protected the interests of foreign investors against those of the local middle and salaried class. The crisis caused all holders of local bank deposits to lose 70 per cent of their money, with the blessing of the IMF.

Therefore, Egypt must realise that although democracy is essential, any formal constitution or system of government will not solve its economic problems. Immediately after the elections, Egypt's new policymakers will have to switch from the formal liberal discourse of democracy to face and discuss the fundamental questions of Egypt's economic structure. In the process, they are liable to discover that it is far more difficult to uproot a corrupt economic regime than to topple a single dictator.

Riaz Haq said...

Here are some excerpts from a report of Pakistan's Higher Education Commission (HEC) under attack by crooked politicians:

ISLAMABAD: Parliament’s revenge against the Higher Education Commission (HEC) for its laudable role in identifying the fake degree holding MPs will not only destroy the higher education structure, built in decades, but also threatens huge and committed $550m (Rs47 billion) in foreign assistance.

Informed government sources told The News that the USAID had hinted on Friday of keeping on hold the committed $250 million assistance under the Kerry-Lugar Act to establish three centres of excellence besides pursuing certain other potential goals for higher education development in the country.

Already, the World Bank, which has only recently approved $300 million soft loan for the HEC to support its various programmes for the next five years, has verbally told the commission’s bosses to wait as the Bank is unsure about the future of the HEC.

The sources said that the USAID, in its communication with the HEC officials, has indicated of not doing the cost reimbursement PIL for the next six months because of a meeting the USAID had with the Economic Affairs Division, which has told the American agency that the HEC is going to be devolved.

Out of the $250 million, so far only $45 million has been transferred to the HEC by the USAID, which had agreed to hand over to the HEC all the education related programmes handled by the US Financial Assistance Development (FAD) programme. Now for the HEC officials, all the committed US aid for the HEC is frozen.

The sources said that under the USAID assistance programme, the HEC had designed to set up three centres of excellence (CoE), including the CoE in water resource at the Mehran University of Engineering and Technology, the CoE in food security at the University of Agriculture, Faisalabad, and the CoE in energy at the University of Engineering and Technology, Peshawar.

Already, as reported, the Higher Education Commission (HEC) would lose 300 million dollars of loan approved by the World Bank (WB) to support its various programmes for the next five years.

According to the report, the $300 million equivalent credit was supposed to finance the government’s tertiary education development programme. It is said that the loan deal would automatically come to an end after the devolution of the HEC due to some legal implications. “There is a clause in the agreement between the WB and HEC that any change in the legal status of the HEC would end the agreement at once,” the reporter quoted HEC Executive Director Dr Sohail Naqvi as saying. This is a soft loan.

The HEC is facing the wrath of the parliamentarians after it had refused to accept any pressure for the verification of the MPs’ degrees, more than 50 of which have already been declared invalid whereas above 200 degrees were termed suspected.

The federal and provincial governments and members of parliament and provincial assemblies exerted all sorts of pressure on the HEC to stop it from the verification work but to no avail. Later, more than 200 MPs refused to cooperate despite the apex court’s decision, refusing to provide to the HEC or the universities concerned the details of their qualification certificates and degrees to stop their verification by the HEC.
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In its meeting on March 28, 2011, the federal cabinet, instead of devolving all functions of the Education Ministry, decided to retain several of them at the federal level by assigning these functions to different ministries and divisions like the cabinet and foreign ministry.

Riaz Haq said...

What a difference 3 years under PPP-led feudal democracy have made.

The failure of the recent bond offering is a serious setback that proves yet again the utter incompetence of the economic team and lack of international investor confidence in the current PPP govt.

It stands in sharp contrast to Pakistan's multiple successful bond offerings from February 2004 to May 2007. Each time the Pakistani paper was oversubscribed substantially. Pakistan emerged as one of the few countries which successfully floated a 30-year bond. This simply reflected the confidence of global investors in Pakistan’s leadership under President Musharraf.

Riaz Haq said...

Deepak: "Also my question is, Can Pakistan follow China model to normalize relations with India."

Yes, it can. But it takes two to make peace.

Indian security analysts and politicians regularly blame Pakistan for the failure of past bilateral diplomatic efforts by citing what they believe is the adverse role of Pakistani military in framing Pakistan's policy toward India. This rationale, however, does not explain why the diplomatic initiatives undertaken by Pakistani military leaders from General Zia to General Musharraf have not borne fruit.

A more rational explanation for the policy failures has recently surfaced in secret US embassy cables leaked by Wikileaks and published by The Hindu. After a meeting with India's National Security Adviser and former Indian intelligence chief M.K. Narayanan in August 2009, American Ambassador Timothy Roemer concluded that Prime Minister Manmohan Singh was isolated within his own government in his “great belief” in talks and negotiations with Pakistan.

Roemer said that although Narayanan's hawkish stance on Pakistan was well known, his willingness to “distance himself from his boss (Manmohan Singh) in an initial courtesy call would suggest that PM Singh is more isolated than we thought within his own inner circle in his effort to "trust but verify" and pursue talks with Pakistan particularly in the wake of the hammering his government took from opposition for the July Sharm al-Sheikh statement with (Pakistan Prime Minister Yusuf Raza) Gilani.”

In the aftermath of the failure of the 2002 Agra Summit with former Indian Prime Minister Atal Behari Vajpayee, former Pakistani President Musharraf said the two leaders were close to a historic agreement until an Indian bureaucrat Vivek Katju conspired with India's entrenched security hawks to insist on last-minute changes unacceptable to Pakistan.

Kashmir remains the single most explosive unresolved issue between India and Pakistan, and President Musharraf devoted a lot of his energies with Prime Minister Manmohan Singh to try and resolve it. The formula envisioned soft or porous borders in Kashmir with freedom of movement for the Kashmiris; exceptional autonomy or "self-governance" within each region of Kashmir; phased demilitarization of all regions; and finally, a "joint supervisory mechanism," with representatives from India, Pakistan and all parts of Kashmir, to oversee the plan’s implementation. It appears now that the hawkish Indian security establishment has succeeded in scuttling the peace efforts based on the Musharraf formula.

A new and significant factor that stands in the way of peace and security in South Asia is the emergence and growth of Indian think tanks, making India second only to the United States in numbers of such think tanks.

They exaggerate terror threats with the help of the media and intelligence folks to promote greater defense and security spending. As a result, India has already become the world's largest importer of weapons last year, according to SIPRI. These weapons imports are done at the expense of other far more pressing needs of the world's largest population of poor, hungry and illiterate people who call India home.

Deepak said...

During 2010 Pakistan flood in which about 24 Million people or 15% of total Pakistan population was affected. Pakistan asked for foreign aid for this people.Even though help was not as expected as Haiti earthquake too all aid. I was watching BBC News, Even in the month of January and February they were showing suffering of flood victims and how they didn't get proper aid.

Then in 2011-2012 budget, Pakistan increased her defense budget by 12% because India increased her by 11%. When there are 24 millions suffering from flood and there is severe power crisis in whole of Pakistan where load shedding of 12-16 hours is common. Don't you think it was unwise for Pakistan to increase its defense budget at that moment.

Riaz Haq said...

Deepak: "I saw many Pakistani politicians or analysts abusing Hindus openly on TV program. Once I was watching some documentary regarding distortion of History in Pakistan. And one point of distortion was to insult Hindus for every Pakistan's problem. In India we do have communal riots but we are never told to hate Muslims and Christians in our text book. ...."

Your textbooks are filled with anti-Muslim propaganda which manifests itself in frequent violence against Indian Muslims and continuing hatred of Pakistan.

Gujarat textbooks are among the worst in India in promoting anti-Muslim and anti-Pakistan hatred.

The following is a report at India Together Website about Gujarat textbooks:

An ongoing study of school textbooks in four states has found stereotypes and biases in Gujarat's textbooks. The Social Studies textbook for standard five has nine stories on mythology masquerading as history. Deepa A reports.

*Gujarat is a border state. Its land and sea boundaries touch the boundaries of Pakistan which is like a den of terrorism. Under such circumstances, it is absolutely necessary for us to understand the effects of terrorism and the role of citizens in the fight against it

*If every countryman becomes an ideal citizen and develops patriotism, the National Population Policy can definitely be achieved

*When people used to meet earlier, they wished each other saying Ram Ram and by shaking hands. Today, people enjoy their meeting by speaking Namaste. Is it not a change?



Indian Supreme Court Justice Katju recently said the myth-making against Muslim rulers, which was a post-1857 British project, had been internalised in India over the years. Thus, Mahmud Ghazni's destruction of the Somnath temple was known but not the fact that Tipu Sultan gave an annual grant to 156 Hindu temples. The judge, who delivered the valedictory address at a conference held to mark the silver jubilee of the Institute of Objective Studies, buttressed his arguments with examples quoted from D.N. Pande's History in the Service of Imperialism.

Dr. Pande, who summarised his conclusions in a lecture to members of the Rajya Sabha in 1977, had said: “Thus under a definite policy the Indian history textbooks were so falsified and distorted as to give an impression that the medieval period of Indian history was full of atrocities committed by Muslim rulers on their Hindu subjects and the Hindus had to suffer terrible indignities under Islamic rule.”

Justice Katju said Dr. Pande came upon the truth about Tipu Sultan in 1928 while verifying a contention — made in a history textbook authored by Dr. Har Prashad Shastri, the then head of the Sanskrit Department in Calcutta University — that during Tipu's rule 3,000 Brahmins had committed suicide to escape conversion to Islam. The only authentication Dr. Shastri could provide was that the reference was contained in the Mysore Gazetteer. But the Gazetteer contained no such reference.

Further research by Dr. Pande showed not only that Tipu paid annual grants to 156 temples, but that he enjoyed cordial relations with the Shankaracharya of Sringeri Math to whom he had addressed at least 30 letters. Dr. Shastri's book, which was in use at the time in high schools across India, was later de-prescribed. But the unsubstantiated allegation continued to masquerade as a fact in history books written later.


http://www.thehindu.com/news/national/article1704204.ece

Riaz Haq said...

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.

Riaz Haq said...

Based on hunger data collected from 2003 to 2009, IFPRI reported that Pakistan's hunger index score worsened this year to 20.7 (2011) after four consecutive years of improvement reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) to and its ranking dropped to 59 in 2011 after rising from 61 to 58 to 52.

During the same period, India's index score improved to 23.7 in 2011 to where it was in 2008 after worsening from 23.7 (2008) to 23.9 (2009) to 24.1 (2010) and its ranking moved to 67 in 2011 from 66 to 65 to 67 on a list of 81 nations.

http://www.ifpri.org/sites/default/files/publications/ghi11.pdf

Riaz Haq said...

In a recent book titled "The Pakistan Cauldron" by James Farwell, the author argues that when Mr. Khan’s proliferation network was exposed in the early 2000s, Mr. Musharraf orchestrated a brilliant strategic communications campaign designed to absolve Islamabad of complicity. On public television, the president extracted a forced confession from Mr. Khan, who unconvincingly pleaded he had acted alone.

President Musharraf then pardoned the scientist (Mr. Khan remains a hero in Pakistan) before putting the serial proliferator into “forced retirement” to shield him from international investigators. “[W]ith his phone line severed, newspaper deliveries halted, and access to television denied. … No one was prosecuted. No intelligence was shared.” Perhaps most troubling, the Bush administration applauded Mr. Musharraf’s handling of the situation and Mr. Khan has yet to face a single question from U.S. or international investigators.

http://www.washingtontimes.com/news/2011/nov/8/inside-pakistans-murky-politics/

Riaz Haq said...

Here's an Express Tribune story on a discussion at Inst of Business Admin in Karachi, Pakistan:

A vigorous difference of opinion among technocrats, economists and corporate leaders on a number of socio-economic issues was witnessed during an interactive session held at the Institute of Business Administration (IBA) on Saturday. And at the end it was unclear whether democracy was the answer, or a dictatorship, as advocates for both arguments came up with pretty convincing logic.

Speaking at the session organised by IBA in collaboration with Blinck, a youth resource group, under the title of “New Year Resolutions for the Economy of Pakistan,” panellists candidly expressed disagreements over the questions of foreign aid, democracy and the interplay of policy-making and implementation at the national level.

“Many people think that a non-democratic set-up is a panacea for the economic problems of Pakistan. They’re wrong. A non-democratic government is not sustainable,” said Ishrat Husain, former governor of the State Bank of Pakistan, who is currently serving as dean and director of IBA. “Democracy is slow and messy. It takes two steps forward and four steps backwards. Yet it’s the only option. The democratic process shouldn’t be interrupted.”

Husain said military regimes do make an extra effort in the beginning to improve the economy because they have not yet developed a constituency of their own. “But later on, they start making compromises.”

Claiming that a democracy needs low poverty and high literacy rates to prosper, Gillette Pakistan CEO Saad Amanullah Khan said Pakistan had only two eras of development: first, in the early 1960s, and second, during the first three years of the Musharraf government. “I don’t care if a dictator is there as long as he revamps the economy,” Khan said.

He said that the idea of a government led by technocrats that could bring the economy back on its feet had its relative merits. Khan emphasised the need for adopting a national vision for long-term growth, adding that the entire nation should work towards its realisation. “Go to Proctor & Gamble or Gillette, and they’ll tell you their five-year goals in detail. But ask a government representative what the vision for Pakistan is for the next five years, you won’t get any definite answer.”

Disagreeing with Khan, Husain said Pakistan did not need any more “visions,” as the problem existed in their implementation only. “The country is full of pious documents. These are beautifully written policy papers that nobody reads. We all agree on the substance of policy, but the implementation is the real issue.”

Responding to a question, former Asia editor for The Economist Simon Long said it was wrong to attribute Pakistan’s dismal economic performance of six decades to its culture or laid-back attitude to work. He said that 35 years ago people often assumed China’s poor economy was a consequence of Confucianism. He said it was now obvious that Confucianism had nothing to do with the slow growth in the economy of China.

Talking about Pakistan’s economic indicators, Long said an economy with a tax-to-GDP ratio of less than 9% was not sustainable. He said it was hard for him to understand how Pakistan’s economic managers would bring down the fiscal deficit in next two to three years.

In response to the comment of a business student that Pakistan should stay away from all kinds of foreign aid and assistance to achieve self-reliance, Husain said the assumption that the Pakistani economy depended on US aid to survive was wrong. “Isolationism won’t solve our problems. Transfer of knowledge and technology is important. You’ve to be outward-oriented.”


http://tribune.com.pk/story/301827/failed-rescue-act-too-many-visions-for-pakistan/

Riaz Haq said...

Here's a News report of losses at sta6e-owned Pakistan Steel Mills:

The Federal Cabinet that met here on Wednesday with Prime Minister Yousaf Raza Gilani in the chair turned down the loss making Pakistan Steel Mills’ (PSM) request for Rs9 billion to bail it out of financial crisis.



PSM, a few days ago, had moved a summary to the federal cabinet through the Ministry of Production to seek a Rs9 billion bailout package from the government as it was in severe financial crisis; and the Mills was running below 20 percent of its capacity. The cabinet deferred the Mills request until the next meeting of the cabinet.



It is worth mentioning that PSM remained a profit-making entity for seven years, from 2000 to 2007, but as the PPP-led coalition government came into office, the entity started accumulating billions of rupees losses and continues to nosedive. The Mills is spending about Rs1.2 billion a month under different heads, whether it is making profit or raking up losses. The giant holds a constant burden of 21,000 employees despite suffering from low productivity.



The Ministry of Production is also now distancing itself from this politically sensitive entity and believes that the Mills is more in control of the Cabinet Committee on Restructuring of State-Owned Enterprises, headed by the Finance Minister Dr Hafeez Sheikh, well-placed sources told The News.



Interestingly, last year in November, the federal minister for production Chaudhry Anwar Ali Cheema also gave a blatant statement by calling the Mills “nothing but a burden on the economy of the country” and had advised the government that it is better to get rid of it rather than feeding it with billions of rupees every year.



Official sources, while giving a blue print of the Mills performance, said that during 2007-08, PSM production attainment stood at 82 percent of its capacity utilisation and after that, it took a declining course to 64 percent in 2008-09, 40 percent in 2009-10 and 35 percent in 2010-11.



This year too, due to shortage of raw material including iron ore and coal, the Mills is running on less than 20 percent of its capacity.



As far as the sale of PSM products is concerned, it was recorded at Rs42.938 billion in 2007-08 and has been on the decline since then, with Rs34.340 billion in 2008-09, Rs23.832 billion in 2009-10 and Rs27.379 billion in 2010-11.



The last time PSM had fetched Rs2.38 billion in profit was in 2007-08, while after that it continuously racked up losses. In 2008-09, its losses were 26.53 billion in 2009-10 it was Rs11.52 billion and in 2010-11 it was Rs11.49 billion.



According to PSM data, during the first quarter (July-September 2011-12) it accumulated losses of about Rs4.3 billion.


http://www.thenews.com.pk/Todays-News-3-102456-Pakistan-Steel-Mills-denied-Rs9bn-bailout-package

Riaz Haq said...

Here's a News report of losses at sta6e-owned Pakistan Steel Mills:

The Federal Cabinet that met here on Wednesday with Prime Minister Yousaf Raza Gilani in the chair turned down the loss making Pakistan Steel Mills’ (PSM) request for Rs9 billion to bail it out of financial crisis.



PSM, a few days ago, had moved a summary to the federal cabinet through the Ministry of Production to seek a Rs9 billion bailout package from the government as it was in severe financial crisis; and the Mills was running below 20 percent of its capacity. The cabinet deferred the Mills request until the next meeting of the cabinet.



It is worth mentioning that PSM remained a profit-making entity for seven years, from 2000 to 2007, but as the PPP-led coalition government came into office, the entity started accumulating billions of rupees losses and continues to nosedive. The Mills is spending about Rs1.2 billion a month under different heads, whether it is making profit or raking up losses. The giant holds a constant burden of 21,000 employees despite suffering from low productivity.



The Ministry of Production is also now distancing itself from this politically sensitive entity and believes that the Mills is more in control of the Cabinet Committee on Restructuring of State-Owned Enterprises, headed by the Finance Minister Dr Hafeez Sheikh, well-placed sources told The News.



Interestingly, last year in November, the federal minister for production Chaudhry Anwar Ali Cheema also gave a blatant statement by calling the Mills “nothing but a burden on the economy of the country” and had advised the government that it is better to get rid of it rather than feeding it with billions of rupees every year.



Official sources, while giving a blue print of the Mills performance, said that during 2007-08, PSM production attainment stood at 82 percent of its capacity utilisation and after that, it took a declining course to 64 percent in 2008-09, 40 percent in 2009-10 and 35 percent in 2010-11.



This year too, due to shortage of raw material including iron ore and coal, the Mills is running on less than 20 percent of its capacity.



As far as the sale of PSM products is concerned, it was recorded at Rs42.938 billion in 2007-08 and has been on the decline since then, with Rs34.340 billion in 2008-09, Rs23.832 billion in 2009-10 and Rs27.379 billion in 2010-11.



The last time PSM had fetched Rs2.38 billion in profit was in 2007-08, while after that it continuously racked up losses. In 2008-09, its losses were 26.53 billion in 2009-10 it was Rs11.52 billion and in 2010-11 it was Rs11.49 billion.



According to PSM data, during the first quarter (July-September 2011-12) it accumulated losses of about Rs4.3 billion.


http://www.thenews.com.pk/Todays-News-3-102456-Pakistan-Steel-Mills-denied-Rs9bn-bailout-package

Riaz Haq said...

Here are excepts of an interview of Elliot Theorist Mark Galasiewski who's bullish on Pakistan:

To answer your question, there are various ways to make long-term investment decisions. For example, Warren Buffett has shown that picking individual stocks can provide good returns over time. But it's a very labor-intensive and time-consuming process, to research companies thoroughly enough to have the kind of conviction that he does. And his “buy and hold” strategy means that he suffers significant drawdowns in his portfolio at times -- like during the 2007-2009 crash.

Elliott wave analysis gives you the opportunity to make long-term bets with a similar conviction -- but with a fraction of the elbow grease. Instead of pouring over hundreds of quarterly reports and legal documents, you look for Elliott wave patterns in the charts of market indexes. Those patterns reflect investors' collective bias, bullish or bearish. (I won't go into details of why this is so; our Club EWI has tons of free reports explaining the mechanics of the Elliott Wave Principle.)

So, knowing what part of the Elliott wave pattern your market is in, you know how the pattern should progress from there, ideally. And that gives you a probabilistic forecast for the trend. It doesn't work 100% of the time (what does), but our subscribers remember more than one successful forecast we've made using Elliott waves.

For example, on March 23, 2009 -- at the time when almost no one felt bullish -- we issued a special report to our subscribers forecasting a multi-year bull market in Indian stocks. Two weeks later, we identified three more markets in the region -- Pakistan, Sri Lanka, and Indonesia -- that we believed were also likely to enjoy an "Indian Ocean Renaissance."

India, Pakistan, Sri Lanka, Indonesia have all since generated some of the best returns among global stock markets. Without knowledge of the Elliott Wave Principle, it would have been difficult to forecast the boom -- especially given the dismal news events at the time. Do you remember the headlines in early 2009?

The world was engulfed by the global financial crisis, and most people believed the worst was still ahead. The currencies of India, Pakistan, Sri Lanka, and Indonesia had collapsed. Pakistan and India were on the brink of conflict over the Mumbai terrorist attacks of late 2008. A civil war was still raging in Sri Lanka. Who would turn bullish on stock under those "fundamental" conditions? We did, and only because Elliott wave patterns in the price charts of those four markets told us to "buy."

And by the way, the terrible conditions in India, Pakistan and Sri Lanka mostly reversed along with the market rally over the next year.
---------
The Wave Principle is how the market works. Financial markets are non-rational and counter-intuitive. Investing according to conventional assumptions eventually leads to financial ruin, since the market too often does the opposite of what most people expect.

Even thinking contrarily is insufficient, because sometimes it’s necessary to run with the herd. But Elliott wave analysis helps you to determine which psychological stance is most appropriate at any given time. Often, the news at the time would be suggesting you do the opposite.


http://www.elliottwave.com/freeupdates/archives/printer/2012/04/26/India,-Pakistan,-Sri-Lanka,-Indonesia-How-Elliott-Wave-Analysis-Turned-BULLISH-When-Few-Dared.-Part-.aspx

Riaz Haq said...

Here's a Nature report on financial crunch hurting university research in Pakistan:

Pakistani universities are grappling with yet another financial crisis after parliament’s approval of a 2012–13 higher-education research budget of 15.8 billion rupees (US$166 million), 10 billion rupees less than the Higher Education Commission (HEC) had asked for.
-----------
The HEC, which governs and distributes funds to Pakistan’s 74 government-funded universities, was set up in 2002, and it brought about revolutionary changes in the country’s higher-education system. University enrolment tripled between 2003 and 2008 and the number of international research publications from Pakistani institutions rocketed from 600 per year to more than 4,300. The HEC’s research funding rose from 270 million rupees in 2002 to 22.5 billion rupees in 2009, but fell to 14 billion rupees last year.

The financial stress has already led to the closure of many research and higher-education projects, including a programme of ‘Core Groups’ to promote life sciences, chemistry and physics. Most of the 175 new projects funded by HEC last year are going at a slow pace or have been halted for want of funds.
---------------
The main reason behind the low funding for the HEC is a constitutional amendment enacted in 2010 that devolved responsibility for several federal ministries, including the education ministry, to the provinces. The government has tried to devolve the HEC as well, even though it was not under the control of the education ministry. This led to mass protests in April 2011, and Pakistan’s Supreme Court declared the plan unlawful.

Academics say that devolving the HEC to the provinces would undo the recent improvements in higher education, and some believe that the federal government considers the HEC a financial liability, as spending money on an institution that will eventually be devolved to the provinces is an unfruitful investment.

Imtiaz Gilani, vice-chancellor of the University of Engineering and Technology in Peshawar, says: “Funding cuts and the non-provision of promised money shows that the government wants to get rid of higher-education responsibility, but this would badly affect universities and research in Pakistan.”

The government issued a notification on 11 June bringing the HEC under the control of the Ministry of Professional and Technical Education, paving the way for devolution. This move was widely opposed by academics, who fear that it will damage the commission’s autonomy.

Kaleem Ullah, president of the Federation of All Pakistan Universities Academic Staff Association (FAPUASA), which organised the 25 June protests, says that his group will not be satisfied until all withheld funds are released. FAPUASA has threatened to stage continuous protests until the funding issue is resolved.


http://www.nature.com/news/academics-protest-shrinking-funds-in-pakistan-1.10935

Riaz Haq said...

Here's a Washington Post story on Pakistans' nostalgia for Musharraf's days:

Beckoned by public spigots promising free, pure drinking water, tourists lined up last week to refresh themselves along the main drag in Murree, a summer resort town perched at 7,500 feet in the Himalayas.

They soon discovered that the taps were dry.

“We’ve gotten nothing,” said one thirsty visitor, Abdul Sattar, 47. And he wasn’t just talking about pani (water), which hasn’t reached Murree for weeks because severe power shortages have shut down pumping stations in the valley below.

Nothing has come from democracy, either, a frustrated Sattar said — at least not as it is practiced by the barely functioning federal government in Islamabad, an hour’s drive down the mountains.

The economy is bad enough to make Sattar and others nostalgic for military rule, when the generals at least kept the nation’s lights on.

“The military is better,” said Amir Iqbal, who co-owns Mr. Food, a small eatery which had just two lunchtime customers. At 44, he recalls fondly the relative prosperity and higher economic growth rates that marked the nine-year regime of Gen. Pervez Musharraf. And, although he was young at the time, he speaks positively of the era of an earlier strongman, Gen. Muhammad Zia ul Haq.

“When the army is in government they keep inflation low,” Iqbal said. “They are good at governance and better organized.”

Such yearnings for order are certainly not new in Pakistan’s 64-year history: The army, generally with popular support, has stepped in three times to topple weak governments and impose martial law.

Judicial obeisance to the generals used to be the norm. But, styling itself as a corruption-battling people’s advocate, the current Supreme Court has inverted the narrative. It has spearheaded investigations into misdeeds of the executive branch and the military.

Some experts call Chief Justice Iftikhar Muhammad Chaudhry the country's most powerful man. Critics accuse him of mounting a “judicial coup” in the name of the rule of law.

His court picked off long-serving Prime Minister Yousuf Raza Gilani last month for refusing to follow its orders and is poised to oust his successor for the same thing. A power struggle among the judiciary, the executive branch and, to a lesser extent, the army, threatens to destabilize the nuclear-armed nation at a time when its counterterrorism partnership with the United States has essentially fallen apart.
---------------
Pakistanis continue to express overwhelming support for the military as an institution, with 77 percent calling it a good influence, the poll found. And the powerful army chief, Gen. Ashfaq Parvez Kayani, is viewed favorably by slightly more than half of those surveyed by Pew in March and April.

But several analysts said they see little likelihood of a coup d’etat. The government may have inoculated itself against one thanks to its own incompetence: The economic situation is so dire that the military lacks the economic resources to fix the country’s intractable problems and would rather avoid taking the rap for failure.

“The army doesn’t want to be held responsible for this,” said Marvin Weinbaum, a Pakistan expert at the Middle East Institute in Washington. “And in some ways there is no reason for them to move in: They’ve got control over the things that they want to control. They still have a veto over any domestic policy that affects them in any substantial way.” ...


http://www.washingtonpost.com/world/asia_pacific/in-pakistan-political-and-economic-crises-stir-nostalgia-for-military-rule/2012/07/04/gJQAnaqhMW_story_1.html

Riaz Haq said...

Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":

On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”

Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.

These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.

At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”

Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
---------
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...


http://www.businessweek.com/articles/2012-11-29/pakistan-land-of-entrepreneurs

Riaz Haq said...

Here's an excerpt of an Express Tribune blog on Musharraf's accomplishments:

1. Nine world class engineering universities were developed and 18 public universities further developed.

2. Pakistan was ranked third in world banking profitability.

3. The IT industry was valued at around $2 billion, including $1 billion in exports and employed around 90,000 professionals.

4. The CNG sector attracted over $70 billion in investment in the past five years and created 45,000 jobs.

5. The telecommunications sector attracted around $10 billion in investments and created over 1.3 million jobs.

6. Industrial parks were set up throughout the country for the first time.

7. Mega projects such as the Saindak, Rekodiq, marble production, coal production, mining and quarrying were pursued.

8. Foreign reserves increased from $700 million to $17 billion.

9. The Karachi stock market went from 700 points to 15,000 points.

10. The literacy rate improved by 11 per cent.

11. Poverty decreased by 10 per cent.

12. Four dams were built: Mirani, Subakzai, Gomalzam, Khurram, and Tangi,

13. Seven motorways were completed or were under construction,

14. Gwadar, an advanced sea port, was developed,

15. 650 kilometres of coastal highways were constructed.

16. A historic 100% increase in tax collection (amounting to Rs1 trillion) was observed.

17. Large scale manufacturing was at a 30-year high, and construction at a 17-year high.

18. Copper and gold deposits were found in Chagai, worth about $600 million annually if sold.

19. A new oil refinery with the UAE that could process 300,000 oil barrels a day was established.

20. The industrial sector registered 26 per cent growth.

21. The economy was the third fastest growing economy after China and India .

22. The Institute of Space Technology was established.

23. Sardar Bahadur Khan Women University Quetta was established.

24. The University of Science and Technology, Bannu, was established.

25. The University of Hazara was founded.

26. The Malakand University in Chakdara was established.

27. The University of Gujrat was established

28. The Virtual University of Pakistan was established

29. Sarhad University of IT in Peshawar was established

30. The National Law University in Islamabad was established

31. The Media University in Islamabad was established

32. University of Education in Lahore was established

33. Lasbela University of Marine Sciences, Baluchistan, was established

34. Baluchistan University of IT & Management, Quetta (2002)

35. The Pakistan economy was worth $ 160 billion in 2007

36. GDP Purchasing Power Parity (PPP) was $ 475.5 billion in 2007

37. The GDP per Capita in 2007 was $ 1000

38. Revenue collection in 2007/08 was Rs1.002 billion

39. Exports in 2007were worth $18.5 billion

40. Textile exports in 2007 were worth $11.2 billion

41. Foreign direct investment in 2007 was $8.5 billion

42. Debt servicing in 2007 was 26 per cent of the GDP

43. The poverty level in 2007 was 24 per cent

44. The literacy rate in 2007 was 53 per cent

45. Pakistan development programs in 2007 were valued at Rs520 billion

46. The Karachi stock exchange in 2007 was $70 billion at 15,000 points

47. Exports in 2007: $18.5 billion

48. Pakistan now has a total of 245,682 educational institutions in all categories, including 164,579 in the public sector and 81,103 in the private sector, according to the National Education Census (NEC-2005).

49. There are now more than 5,000 Pakistanis doing PhDs in foreign countries on scholarship. 300 Pakistanis receive PhD degrees every year, in 1999, the number was just 20.

50. In total, 99,319 educational institutions increased in Musharraf’s era!


http://blogs.tribune.com.pk/story/2092/50-reasons-pakistan-needs-musharraf/

Riaz Haq said...

Pakistan's GDP as percentage of world GDP remained flat 0.58% from 1990 to 2000, and then increased to 0.63% in 2010, according to Global Finance website.

http://www.gfmag.com/gdp-data-country-reports/204-pakistan-gdp-country-report.htm

Riaz Haq said...

Here's a News Op Ed by Dr. Ata ur Rehman Khan on Musharraf's time in office:

In the agricultural sector a number of important irrigation projects were initiated. The Diamer Bhasha Dam was launched. The Mangla Dam was raised by 30 feet increasing 2.9 maf water storage capacity and 100MW electricity. A number of new dams and canals were built (Mirani Dam for Balochistan, Subukzai Dam for Balochistan and Gomal Zam Dam for KP; Kachi Canal from Taunsa to Dera Bugti and Jhal Magsi to irrigate 713,000 acres of barren cotton producing land, the Thal Canal for Punjab, Rainee Canal for Sindh).

Overall three million acres of barren land were brought under cultivation. The Right Bank Outfall Drain (RBOD) was constructed through Sindh, thereby saving Indus River and Manchar Lake (Sind) from pollution. The steps taken led to an increase in wheat production from 14 million tons to 22 million tons, and increase in cotton production from nine million bales to 13 million bales.

Price control was exercised on essential items. The prices of edible household items (flour, naan, milk, tea, sugar, meat, vegetable oil etc) have tripled or quadrupled in the last five years. A rotational loan system was introduced through banks for poor farmers and loan facility for farmers increased from Rs35 billion through ZTBL only, to Rs160 billion from all other private banks.

Overall 2900MW of electricity was added to national generation capacity. The new energy projects initiated included the Ghazi Barotha hydro electricity project (1600MW), the Chashma-II nuclear electricity plant (300MW). The Neelum-Jhelum hydroelectricity project was initiated (1800 MW), the Satpara Power project in Skardu, and the Naltar power project in Gilgit.

A true revolution was brought about in the telecommunications sector. The number of mobile phones increased from 600,000 in the year 2000 to over 7 crore in 2006. Tele-density was increased from 2.9 percent to over 70 percent, and millions of jobs were created in the telecom sector. The IT sector also saw a phenomenal growth with internet connectivity spreading rapidly, particularly during 2000-2003 from 40 cities to over 2000 towns of Pakistan.

Fibre optic connectivity increased from 30 cities to over 1500 towns of Pakistan in the same period. The bandwidth cost of two megabytes was reduced sharply from $86,000 to $3,000 per month. Pakistan’s first satellite PakSat 1 was placed in space. Industry prospered as never before and industrial growth was in double figures throughout the nine-year period.

A revolution was brought about in the higher education sector with the establishment of the Higher Education Commission. The annual allocation for higher education was increased from only Rs500 million in 2000 to Rs28 billion in 2008, thereby laying the foundations of the development of a strong knowledge economy. Student enrolment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutes increased from 57 in 2000 to 137 by 2008.

This rapid transformation deeply worried India and a detailed presentation was given to the Indian prime minister on July 22 about the dramatic progress in Pakistan.

A number of steps were taken to strengthen democracy at the grassroots. A large number of new TV channels were allowed and the media given full freedom. The local government system was launched to empower the people through a third tier of government. Women were empowered politically through reserved seats at all tiers of government. Minorities were provided with the system of joint electorate. ....


http://www.thenews.com.pk/Todays-News-9-222331-Lest-we-forget

Riaz Haq said...

"Speaking fee for #Musharraf in $150K-200K range for a day," says Embark USA President David B. Wheeler. #Pakistan

http://www.newsweek.com/pakistans-musharraf-lucrative-speaking-fees-88033

"The [speaking] fee for Musharraf would be in the $150,000-200,000 range for a day," says Embark President David B. Wheeler, "plus jet and other V.I.P. arrangements on the ground." Wheeler says Clinton, for whom Embark has arranged speaking engagements in the Middle East, commands up to $250,000 per appearance. "If we did multiple events in multiple cities, [Musharraf] could get closer to the $500,000 to $1,000,000 range [for a series of talks]," he said. Embark, which promises "unique experiences that educate, entertain and enlighten," has also booked speeches for former U.S. President George H.W. Bush and former U.S. Secretary of State Colin Powell.

Pakistanis who know Musharraf well say this is good news for the former president, who is not believed to have salted away a fortune as some of his predecessors have done (Musharraf will only receive a modest army retirement pension). But he is a long way from the poor house. Workers are putting the finishing touches on a mansion, said to be worth some $2 million dollars, that he is building on five acres of prime land just outside Islamabad. Since his resignation he has been playing golf and tennis with friends, surrounded by heavy security, and is also planning to write a sequel to his successful 2006 autobiography, "In the Line of Fire," which could easily net him another seven-figure windfall.

Riaz Haq said...

Musharraf, Rove among speakers heading to Portland in 2010

The folks who attract big international names to Portland each year have done it again, landing Pervez Musharraf, Pakistan's former president, to speak here in March.

he World Affairs Council of Oregon's 2010 speaker series will also feature Nobel Prize-winning economist Joseph Stiglitz; Jane Lubchenco, National Oceanographic and Atmospheric Administration chief administrator; and -- in a face-off --Howard Dean, former chairman of the Democratic National Committee, and Karl Rove, strategist for President George W. Bush.
The speakers will take the stage at the Arlene Schnitzer Concert Hall in four events scheduled for February through May. The first will be at 7 p.m. Feb. 10, as Rove and Dean clash over America's role in the world.

They will kick off the 10th year of what has become the nation's biggest annual international series in terms of audience size and speaker stature.

Musharraf, who held what Time magazine termed the world's most dangerous job from 2001 to 2008, is the most enigmatic of the bunch. Derided as a dictator, Musharraf became a key U.S. ally during the Bush war on terror, balancing Washington's calls to crack down on extremism against demands from anti-American Islamist constituents.

"We don't get to hear very often what President Musharraf really thinks," said Wim Wiewel, Portland State University president and a series subscriber. "He was certainly a critical partner for the U.S. who nonetheless had to make all kinds of compromises with people who are enemies of the U.S."
Tickets
Series prices run $125 to $500, $90 for students. Go here or call 503-274-7488.The World Affairs Council is a nonpartisan membership organization that sponsors talks, helps schools provide international education and hosts emerging foreign leaders.
Staff members strive to outdo themselves with luminaries for series. The task becomes more challenging each year -- past speakers include Mikhail Gorbachev, the Dalai Lama and Sandra Day O'Connor -- as speakers' bureaus demand higher fees.

Musharraf, set to appear March 15, is the most controversial and highest-profile speaker of this year's series. He declined requests to be interviewed, as did Stiglitz.


Musharraf seized power in 1999 during a coup. As head of the military, Musharraf said he wanted to move away from Pakistan's "sham democracy." In 2007, Musharraf staged what many Pakistanis termed his "second coup," suspending the constitution, firing the supreme court's chief justice and declaring martial law.
After the Sept. 11, 2001, attacks on the United States, Musharraf agreed to join the Bush administration's so-called war on terror. Suddenly the man denounced by some Westerners as a tin-pot dictator became a close U.S. ally.


http://www.oregonlive.com/portland/index.ssf/2009/12/musharraf_rove_among_speakers.html

Riaz Haq said...

Here's an announcement of Peninsula Speaker Series in the San Francisco Bay Area that include Musharraf as a featured speaker, along with Condeleeza Rice, Laura Tyson and Paul Krugman.


Ticket prices ranged from $294 to $403 per person

http://speakerseries.net/pdf/series2009_2010.pdf

Riaz Haq said...

Dawn Survey Result: Who's been #Pakistan's best ruler? Liaquat Ali 1, Ayub 2, #Musharraf 3, ZA Bhutto 4, Benazir 5, Ghulam Mohammad 6, Nawaz Sharif 7, Zia 8, Iskandar Mirza 9, Yahya Khan 10, Zardari 11. https://www.dawn.com/news/1354690/survey-results-who-has-been-pakistans-best-ruler

Riaz Haq said...

The Greater Thal Canal project was inaugurated by former president Gen (retd) Pervez Musharraf on August 16, 2001, at Noorpur Thal, adjacent to Adi Kot Chashma Jhelum Link Canal. The estimated cost of the project was around Rs30 billion.

https://tribune.com.pk/story/2134724/greater-thal-canal-willfully-ignored

The project was to be completed in eight years, and after completion, it was expected that almost Rs1.73 million acres of land would be irrigated in Bhakkar, Layyah, Khushab and Jhang districts. Apart from this, approximately 1.97 million acres of arid land would be converted into fertile land. So far, the first phase of the project has been completed with the cost of Rs10 billion.

The project was conceived in 1836 when Queen Victoria ordered a survey of the area. The survey was completed in six months. However, the project could not be initiated due to the opposition of the Hindus who alleged the British of giving undue favours to the Muslims living in the area.

ADB TO PROVIDE PAKISTAN $1.055B FOR NINE PROJECTS

Former military ruler General Ziaul Haq also made an unsuccessful attempt to initiate this project in 1979.

Although, the construction of phase I has affected farmers' fertile land

After Musharraf's regime, the democratic governments shelved the project which could have brought an agricultural revolution in the country. The network of canals has vanished under the mounds of sand. The canal escape of the project has also turned into a forest of shrubs and wild bushes.


The government has allocated a fund of Rs250 million for the cleaning of the canal. Reportedly, the phase II and III comprise of Dhingana Branch, Mankera Branch and Noorpur Thal Branch which have been ignored for the last 19 years.

The completion of phase II and III would irrigate millions of acres of land in the area of Thal, Bhakkar, Jhang, Khushab and Layyah and change the fate of poor farmers.

Riaz Haq said...

#Pakistan's public #debt stands at 78% of #GDP. Annual interest payments to use up one-third of the Rs. 8.5 trillion ($54 billion) 2021 federal budget....90% of debt payments are for domestic debt & 10% for foreign debt servicing. #economy #Budget2021 https://asia.nikkei.com/Economy/Interest-payments-consume-one-third-of-Pakistan-s-budget


https://twitter.com/haqsmusings/status/1408212855741030400?s=20


Interest payments consume one-third of Pakistan's budget
Over-reliance on loans bodes ill for fiscal sustainability and domestic needs

https://asia.nikkei.com/Economy/Interest-payments-consume-one-third-of-Pakistan-s-budget

Fiscal sustainability has become a major issue among political and economic analysts after Pakistan revealed early this month that servicing debt accounts for more than one-third of its federal budget.

Finance Minister Shaukat Tareen in the National Assembly on June 12 announced the fiscal 2021 federal budget of 8.48 trillion rupees ($54 billion). Interest payments on debt, which are expected to grow by 3.9% from the ongoing fiscal year, account for 3.06 trillion rupees, or 36% of budget expenditures. In contrast, the government is only spending 600 billion rupees on subsidies and 100 billion rupees for COVID-19 vaccinations and emergencies.

The budget also reveals a deficit of 3.99 trillion rupees. The federal government plans to borrow 3.74 trillion rupees to finance this deficit, which makes up 94% of the deficit.

Pakistan's reliance on debt is a violation of the country's Fiscal Responsibility and Debt Limitation Act 2005, which states that the government must limit debt to 60% of gross domestic product. Currently, the ratio stands at 78% of Pakistan's $303 billion GDP.

Hasaan Khawar, a public policy analyst based in Islamabad, says Pakistan borrows heavily not only to finance current expenditures but also to service existing debt. "Pakistan is a having a primary fiscal deficit. That's why the [International Monetary Fund] has been demanding a primary budget surplus so that it starts reducing debt."

"Resources that could have been spent on essential sectors like health, education or public investment are now being dedicated to interest payments," said Naafey Sardar, a senior research associate at Texas A&M University in the U.S., emphasizing that increased debt financing presents a trade-off for Pakistan. "Since increased public investment and expenditures on education and health are associated with improvements in economic growth, higher debt financing expenditures reflect a missed opportunity," he said.

Of the 3.06 trillion rupees earmarked for interest payments on debt, 2.76 trillion rupees, or 90%, will go toward servicing domestic debt.

A senior official involved with the government's development planning told Nikkei on condition of anonymity that domestic borrowing is unsustainable. "Domestic borrowing is always at high commercial rates and external borrowing is mostly at concessional rates. That's why domestic borrowing costs the economy more," the official said.

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Experts believe that a combination of reduced government spending and a tax increase is the solution.

Sardar believes that the way out is to increase tax revenue. "Higher tax receipts can be earned by increasing the corporate tax rate from 29% to 35%," he said. Sardar added that at a time when corporate profits are surging, increasing corporate taxes could be a viable option.

Khawar believes that Pakistan can accrue surpluses by controlling fiscal waste. He says there is a multipronged strategy to deal with the problem. "Government needs to widen the tax base using technology for tax enforcement while reducing expenditures in loss-making state-owned enterprises," he said. "There is no quick fix to this. That's the bottom line."

Riaz Haq said...

From Musharraf to the PTI

https://www.thenews.com.pk/print/384431-from-musharraf-to-the-pti


To separate fact from fiction, key economic indicators need to be analysed. Musharraf increased reserves from $1.9 to $11.4 billion. The PPP left $7.2 billion. The PML-N reached a record high of $19.4 billion but ended at $10 billion in FY18. Reserves were $8.3 billion on October 5, 2018. No government could avert the IMF. The PTI may borrow $15 billion.

Musharraf increased the current account deficit from 0.7 percent of GDP to 4.2 percent. The PPP reduced it drastically from 8.2 percent to 1.1 percent. The PML-N ended at 5.8 percent ($18 billion) in FY18. In July 2018 it was 8.3 percent ($2.2 billion) and in August 2.3 percent ($0.6 billion) – a big drop. The dollar-rupee rate increased from 52 to 61, a 17 percent increase when Musharraf left. The PPP increased it by 61 percent to 98. The PML-N increased it by 24 percent to 121. In October 2018, it is 133.

Musharraf increased trade deficit from 2.1 percent of GDP to 8.9 percent. The PPP maintained it at 8.9 percent. The PML-N ended at 9.9 percent ($31 billion). In July 2018 it was 13.6 percent ($3.5 billion) and in Aug 9.2 percent ($2.4 billion). Exports reached a high of 13.5 percent of GDP during Musharraf’s period but ended at 11 percent. The PPP remained at 10.6 percent while the PML-N managed 7.9 percent ($25 billion). In August 2018 it was 8 percent ($2 billion).

Exports are limited to textiles (55 percent) and rice (8 percent). Dawood Razak’s target is $25 billion. Imports rose from 15 percent to 20 percent of GDP during Musharraf’s government. The PPP reduced them to 19.4 percent and the PML-N reduced it further to 18 percent ($56 billion). In August 2018 it was 17.3 percent ($4.5 billion).

Remittances were $5.5 billion in Musharraf’s term. They increased to $14 billion in the PPP’s time and $20 billion in the PML-N’s. Remittances growth dropped drastically to one percent in FY18 from double digits. Imran Khan’s target of $40 billion seems unrealistic. FDI increased from $120 million to $5 billion during Musharraf’s term. In the PPP’s time it dropped to $1.3 billion and in the PML-N’s to $2.8 billion. Pakistan’s Doing Business ranking dropped from 76th in 2007 to 147th in 2017. KSE100 Index has dropped 11.6 percent since August 20 this year. The PTI will need to address the prevailing economic and political uncertainty.

Musharraf increased GDP to 5.5 percent peaking at 9 percent. In FY09 it dropped it to 0.4 percent but the PPP ended with 3.7 percent. The PML-N managed 5.8 percent. The IMF has dampened the PTI’s grand plans with a growth rate of 3 percent, policy rate at 15 percent and inflation at 14 percent. Musharraf reduced the budget deficit from 4.9 percent to 4.1 percent of GDP. The PPP increased it from 7.3 percent to 8.2 percent. The PML-N ended at 6.6 percent (legal limit 4 percent) and borrowed Rs2,260 billion in FY18.

During Musharraf’s period, government expenditure financed through borrowing was 22 percent, PPP 36 percent, PML-N 27 percent. The tax-to-GDP ratio declined from 9.5 percent during Musharraf’s period to 8.7 percent in the PPP’s time. The PML-N increased it to 11.2 percent (Rs3,842 billion). The IMF has proposed 15 percent, a daunting task. Agriculture – with 19 percent share in GDP – contributes only one percent to taxes.

Gross public debt during Musharraf’s time dropped from 79 percent of GDP (Rs3,018 billion) to 53 percent (Rs4,846 billion) in FY07. The PPP increased it from 58 percent (Rs6,128 billion) to 64 percent (Rs14,292 billion) in FY13. The PML-N reached 73 percent (Rs24,952 billion).

PSE debt was Rs220 billion in June 2007 (16 percent of total). The PPP added Rs276 billion (20 percent), while the PML-N increased it by Rs898 billion (64 percent) to end at Rs1,393 billion.

Riaz Haq said...

From Musharraf to the PTI

https://www.thenews.com.pk/print/384431-from-musharraf-to-the-pti

The IMF recommends privatisation. PIA’s accumulated losses from 1998 to 2007 were Rs23 billion (6 percent). The PPP added Rs119 billion (33 percent) while the PML-N added Rs222 billion (61 percent) to end at about Rs364 billion. It is difficult to imagine PIA competing with Gulf airlines. Steel Mills profit were Rs9.5 billion during Musharraf’s time. The PPP recorded a loss of Rs119 billion; the PML-N increased it by Rs81 billion to Rs200 billion.

Oil prices increased from $25 in Dec 1999 per barrel to $90 by Dec 2007 (313 percent increase) during Musharraf’s period. The PPP faced over $90 in their term. The average in the PML-N’s time was $55. The PTI started at $73 but is now faced with $85. Gasoline’s average price increased from Rs26/litre to Rs56 (115 percent increase) during Musharraf’s period. The PPP increased it to Rs101 (80 percent) but the PML-N decreased it to Rs78 (-23 percent). In October this year, it increased to Rs93 (19 percent).

The total installed capacity increased to 29,573 MW by February 2017. In this, Musharraf’s contribution is 16 percent, PPP 28 percent and PML-N 56 percent. Considering the last four years of each government, Musharraf’s contribution was 30 percent, PPP 32 percent and PML-N 38 percent in electricity generation. In 2006, the circular debt was Rs87 billion. In August 2018, it was Rs1,200 billion. Musharraf added Rs145 billion (12.6 percent), PPP Rs727 billion (63.2 percent) and PML-N Rs279 billion (24.2 percent). No government has found a solution.

There is no doubt that the economy has been mismanaged. Past governments have been facing similar economic circumstances and governance realities as the PTI, whose main problem is tackling the expectations of its voters. International agencies are also culprits of the mess due to their propensity to provide loans for perpetuating poor governance and corruption. After signing the agreement with the IMF, the PTI’s 100-day agenda and election promises will be compromised. The new captain, the IMF, will carry out a heart transplant as it is not satisfied with Asad Umar’s bypass. ‘IMF ka Pakistan’ will replace ‘Naya Pakistan’.

The writer is a former member of the National Reconstruction Bureau.

Email: riazkhancrm@msn.com