November 4, 2001	Sunday	Shaba’an 17, 1422

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ISLAMABAD, Nov 3: President General Pervez Musharraf has directed the officials of the Ministry of Finance and Planning Commission to change the whole economic and development strategy of the country to minimise serious effects on the economy being experienced in the wake of September 11 terror attacks on America.

Official sources said here on Saturday the president told the federal cabinet on Wednesday that in the absence of much needed fiscal space, the government was left with no option but to “make drastic re-adjustments” in its economic and development strategy.

The president directed the concerned officials to urgently finalise a new strategy to meet the new situation as only financial pledges and commitments have been made by different countries but nothing has actually come in the kitty.

Sources said that as per the directive of the president, the work on a number of mega development projects has been halted. “Initially we have decided to pull out roughly Rs 12 billion from National Drainage Programme, Flood Control project and Islamabad- Peshawar motorway project”, an official said.

When contacted, he said that Rs 12 billion will be used for covering up revenues losses being experienced due to 30 per cent reduction in exports.

If the current situation continued to persist, sources said, the government will have to slash its Rs 120 billion Public Sector Development Programme (PSDP).

President Pervez Musharraf told the cabinet that he has been receiving firm assurances from US led coalition for generous financial support both in the shape of grants and soft loans along with market access. However, he said that unless that support materialises, he has no alternative but to ask the federal planners to make drastic re-adjustments.

Official sources confirmed that US government has informed them that “it could take several months” to finalise any greater economic and financial package for Pakistan by Washington and other International Financial Institutions (IFIs). “We have been told that there is a genuine difficulty of getting everything cleared from US Congress and other institutions”, another official said hoping that US and its allies would come for the timely financial support of Pakistan.

Sources said that Finance Minister Shaukat Aziz who would be returning from Tokyo on Saturday, would meet the president after arrival and inform him about the success of his visit. Japan too has made only pledges and given assurances for providing new market access to Pakistan after it decided to join the international community for combating terrorism.

So far the United Kingdom has written off its 40 million dollar loans, while Canada has converted its 300 million dollar loans into development funding through a swap. The US and its allies have committed 800 million dollars cash grant but that was still to be disbursed to Pakistan. In addition, they had declared to provide 600 million dollars for Afghan displaced persons.

The European Union (EU) nevertheless, has reduced its 10 per cent tariff for Pakistani goods which officials said, will offer additional 400 million dollar to Pakistan during the current financial year. Also EU has promised new market access for Pakistani textiles over which two of its members - Portugal and Greece - have expressed their serious reservations.

There were reports of 2 billion dollar new package for Pakistan by the US, World Bank and the IMF. An official of the US State Department had recently said that billions of dollars could be jointly offered to Pakistan. But Mr Thomas C. Dawson, Director External Relations Department of the IMF on Thursday ruled out the possibility of any bigger Poverty Reduction Growth Facility (PRGF) for Pakistan. He said it was not possible for Fund to make available 2 billion dollars for Pakistan.

“Now much depends on president’s visit to the United States in the second week of this month to have any announcement for disbursement of funds”, an official of the ministry of finance said.