KARACHI, Jan 3: Two conflicting perceptions on Pakistan’s current economic and management mess were offered on Thursday before an audience of professional managers. The occasion was a seminar of the Management Association of Pakistan (MAP) on the subject: “Imperatives, prospects and challenges for economic growth” and the speakers were the Governor of State Bank of Pakistan Dr Ishrat Hussain and a well known independent economist, researcher and social scientist Kaiser Bengali.

The SBP governor identified lack of business environment, absence of policy framework, governance void (of course all in the past) and finally the crippling blow that came from outside on September 11 when twin world trade towers in New York and the Pentagon in Washington were targeted, to be the factors that stunted economic growth, increased debt burden and spread poverty.

“We have put in place policies framework, are in a process of improving institutional structures, introducing governance reforms, obtained debt relief to gain fiscal space in the budget and are now addressing the growth issue,” Dr Ishrat informed the business executives who thronged the big hall of a local hotel.

A fiercely independent Kaiser Bengali did not mince words to hold “narrow vision of the ruling establishment” responsible for the all the economic and social mess in the country. “Imprudent political decisions lead to economic chaos and vice versa” was the crux of the message conveyed by Kaiser Bengali, who declared that today’s situation amply manifest “ruling establishment’s total failure in the spheres of economy and security.”

Articulation of conflicting views on the prevailing situation generated a lot of heat, and participants did not hesitate in asking loaded questions. One of them went to the extent of asking the SBP governor bluntly that why he was using the word “we” while speaking of the government policies. “The office of the SBP governor is independent and segregated from the government” was the argument given by the questioner.

“I am a part of the government’s economic team and take all the responsibility for the decisions in which I am involved,” Dr Ishrat frankly responded stating that if at any time he found government exceeding borrowing limit “I will not hesitate to stop government from doing it.”

“The government will not obtain commercial loans from the international market,” he declared while elaborating on the debt servicing concessions obtained by Pakistan from the Paris Club in respect of 12 billion dollars debt stock.

Dr Ishrat was confident that Pakistan’s debt servicing will come down to 30 to 35 per cent of total foreign exchange earning in the year 2004 as against existing 70 per cent.

Another advantage of the debt relief is the availability of fiscal space of 1.1 billion dollars in the budget. He said that 40 per cent of this available fiscal space will go to narrow down budget deficit and 15 per cent will be used for investment in education, health care, water supply and other areas of the social sector.

In his presentation, Dr Ishrat said that by putting in place the policies framework in different areas “we have achieved some stabilization” making a specific reference to the narrowing down of current account deficit and building up the foreign exchange reserves.

Stabilization in exchange value was the other achievement that the SBP governor claimed credit of stating that rupee-dollar parity remained stable all along though it was a bit volatile after September 11.

He spoke of the Khushhal Pakistan project, setting up of Khushhali Bank for micro credit as government’s programme to address the poverty issue. Aga Khan is setting up such a bank in private sector.

He said that SBP is framing a regulatory framework for the operation of micro credit banks in Pakistan.

Pakistan, he said, still faces a big challenge because of the synchronised recession that engulfs the US, EU and Japan. It is bound to bring down international demand for Pakistan’s goods and service in the export market.

Nonetheless, there are opportunities available in reconstruction of Afghanistan and hoped that Pakistan businessmen will avail this opportunity in a big way.

Kaiser Bengali expressed the view that September 11 incident has affected the globalization process in a big way.

Even before this incident, globalization did not allow immigrants movement but facilitated only the transfer of trade and capital.

“After September 11 all this flow of capital and trade has been affected,” he pointed out and spoke of the various restrictions that are being announced by the developed countries.

In another context he said Afghanistan’s reconstruction was never on the agenda of Pakistan’s ruling establishment. “For almost five year’s Afghanistan remained virtually under Pakistan’s control when Taliban ruled over there,” he recalled and was more than blunt to point out that “it was strategic depth” that was the priority of Pakistan’s decision makers. “Neither the welfare and prosperity of people of Pakistan nor those of Afghanistan are on the agenda of Pakistan’s ruling elite,” Kaiser said.

Does economic growth alleviates poverty? This was another issue that was discussed in the seminar. A participant spoke of the growth and improvement in social sectors in China whereas India shows economic growth but does not match China in social sectors.

“China took the decision of universal education and health care much earlier,” Dr Ishrat said and pointed out that there were economic setbacks in 70s but then China continued its pace and is now on path of progress.

India picked up pace of progress hardly ten years ago and still to do a lot to improve the social standards of its people.

Answering another question, Kaiser Bengali said Pakistan’s foreign policy should be driven by economic prosperity and growth as it is in most of the countries.