| June 11, 2002 | Tuesday | Rabi-ul-Awwal 29, 1423 |
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Toeing the Israeli line
THE National Economic Council (NEC) has approved an allocation of Rs. 134 billion for the Public Sector Development Programme (PSDP) for the next year against the original allocation of Rs. 120 billion for the current year. The NEC has also fixed the rate of growth of Gross Domestic Product (GDP) for the coming year at 4.5 per cent against the original target of four per cent for 2001-002. Both these targets appear to be too modest if viewed in the context of the real requirements of a country whose population is galloping at the rate of 2.5 per cent and whose infrastructural backlog, both physical and social, has become stupendous over the years. However, in the context of on-ground realities with respect to our ability to generate enough resources and our capacity to absorb these, the targets approved by the NEC for the next year appear to be realistic. But if one goes by the past record of the governments, one finds it rather difficult to have much confidence in that the official economic managers would scrupulously strive towards the realization of their own targets during the course of the year, rather than trifle with these on one pretext or another.
The current year’s allocation of Rs. 120 billion for the PSDP was slashed to Rs. 100 billion because of a shortfall in the revenue collection target by almost Rs. 50 billion and also because additional resources were needed to be diverted to defence. Last year as well, the same thing happened but the reason then was drought besides the traditional shortfall in the revenue collection target. The performance of the economy as a result suffered seriously in these two years with the previous year showing a growth rate of less than three per cent against a target of 4.5 per cent and this year it is only 3.6 per cent against the target of four per cent. Even the achievement of 3.6 per cent has been made possible by the generous aid and assistance provided by foreign donors for our services in the context of the international war against terrorism. In fact, even the average annual growth rate of 5-6 per cent until the decade of the 1990s was made possible because of the generous concessional capital inflows made available in the shape of foreign assistance.
Indeed, if that growth rate had been real and based on genuine development, we would not have had to face the ignominy of certain default as soon as the tap of these flows was turned off in the decade of the 1990s when we went under all kinds of sanctions. The only thing that kept the country economically afloat all these years, besides foreign doles, was its agriculture sector. This is in spite of the fact that the contribution of this sector has been left to be determined each year by the vagaries of weather rather than making it less dependent on climatic uncertainties by ensuring adequate availability of irrigation water and other inputs and putting it on a firm footing. It is, therefore, necessary that this aspect of the matter is kept in mind while designing future development programmes, both short- and long-term. An accelerated growth rate in the agriculture sector would ensure speedier expansion of the overall economy and result in increased generation of revenue incomes.
It is indeed gratifying to note that the NEC has reserved 40 per cent of the next year’s PSDP’s allocation for social sectors such as health, education and poverty alleviation. One hopes that considering the primacy of these sectors, care will be taken to ensure full utilization of the allotted money on the relevant projects during the year. As for the decision to allow the provinces to impose 2.5 per cent GST to collect an estimated total amount of about Rs. 32 billion for onward distribution among local governments through the proposed provincial finance commission, it can be justified only if that amount is spent strictly on poverty alleviation programmes at the grassroots. Over the years it has been the practice of successive governments to hold the development budget as a cushion against budgetary deficit which during the current year was fixed at 5.7 per cent of the GDP. The next year’s target for the same has been fixed at 4.2 per cent. However, under the terms of the three-year Poverty Alleviation and Growth Facility (PRGF) loan, Pakistan is obliged to protect its poverty and social sector allocations even if revenues fall short and demands from other sectors like defence become urgent. But this condition can only be met if the IMF were to grant Pakistan a three-year relaxation of at least one per cent of GDP on the deficit target. In case this is not done, at the end of the PRGF programme in 2003-04, poverty in Pakistan is more likely to increase rather than decrease.
IF there were any hopes that the US was going to play honest broker between the Palestinians and Israelis in a bid to end the violence, unrest and the dangerous drift in the Middle East, they were all but dashed by President George Bush on Saturday. Addressing a joint press conference with Egyptian President Hosni Mubarak, Bush went on to endorse, more or less, the Israeli position. The Israelis seek an end to the violence, the sidelining of Palestinian leader Yasser Arafat and a thorough revamping of the Palestinian Authority as a precondition for any talks on a wider settlement. To the dismay of Mubarak, Bush seemed to brush aside the Egyptian leader’s radically different but realistic proposal, and refused to be drawn into setting out a clear timetable for talks on the creation of a Palestinian state. Mubarak had suggested that the best way to end the prevailing turbulence was for the Israelis to withdraw from Palestinian territories, stop the on-going construction of Jewish settlements in the occupied areas and to commence a political dialogue aimed at paving the way for a Palestinian state by next year.
Mubarak argued that these measures would give the Palestinians something tangible to look forward to and could reduce the growing anger and frustration among the Palestinians, making them prone to violence in the face of Israeli persecution. Bush, however, insisted that the most pressing priority was the reform of the Palestinian Authority’s security and bureaucratic apparatus. Ironically, the beleaguered Yasser Arafat responded almost immediately by ordering a wide-ranging reorganization of his cabinet to set in motion the reforms process. Meanwhile, Israel decided to launch further brutal incursions into Palestinian towns in order to hunt down “terrorists”. The Israelis are clearly happy to postpone indefinitely any dialogue on a wider political settlement. Sharon would like an immediate ceasefire from the Palestinians followed by an interim period of several years in which a framework for ‘a settlement’ could be worked out. The US president’s refusal to spell out any timetable for the resumption of dialogue, or to offer the Palestinians any hope at all, fits neatly into the Israeli scheme of things. That the US will at least appear to be even-handed in its handling of the Israel-Palestinian issue once again looks like an elusive prospect.