October 16, 2003	Thursday	Sha'aban 19, 1424

KARACHI, Oct 15: Scholars and economists said here on Wednesday that the nation had lost its direction because it had ignored guiding principles enshrined in the 1973 Constitution.

Speakers at a two-day conference organized by SZABIST on “Budgets and sustainable development in Pakistan: myths and realities” also stressed that equity and justice had been denied as a result of deviation from the constitutional path.

The absence of democratic federalism has deprived the provinces of their rightful share in resources based on equity, justice and needs. The backward regions have suffered because their governments have not carried out constitutional mandate. Mega projects, which benefit a single province are funded by federal funds, depriving other provinces of a legitimate share in national resources. The Islamabad-Lahore Motor Highway and Greater Thal Project were particularly mentioned in this context.

While tax revenues are shared according to the NFC formula, it was pointed out that the decision on the size of development spending and specific projects is made by the Ministry of Finance instead of the Planning Commission. Nearly 80-85 per cent of the Public Sector Development Programme (PSDP) resources are managed by the federation and the residual 20-25 per cent goes to the provinces.

Similarly, the economists did not see any signs of sustainable economic development with low priority accorded to the social development and very poor social indicators. No government has accorded the social sector the priority that it deserves, lamented a retired official.

“The elite has an eye on donors’ money and the yardstick for success is how much loans have been secured,” stated another speaker. Bad projects, tough donor’s conditionalities and poor execution have led to debt trap. Supported by bureaucrats, the projects have been elite-driven and donor-driven. Now, to make matters worse, projects are being undertaken without establishing their feasibility.

The speakers at the first technical session of the conference were research scholars and economists Jamal Mustafa, Dr Qazi Masood Ahmed and Mohammad Sabir and Prof Mushtaq Mirani. Akbar Zaidi presided over the conference.

Presided over by a leading economist Nazar Memon, the second technical session was addressed by Fazalullah Qureshi, former secretary, Planning and Development. Earlier, the delegates were welcomed by Dr Jvaid Leghari, project director, and M. Suleman Shaikh, secretary, SZABIST, BOT. Co-ordinator Sikander Brohi spelt out the objectives of the conference.

Speaking on “political economy of federal budget development investment” with particular reference to communications sector, Prof Mushtaq Mirani said Sindh was not on the map of national highways and the province had no strategic role in building national road network.

Stating that 90 per cent of the population in the province lived on 50-100 miles stretch of land on either side of the River Indus, he stressed that towns and cities should be linked by bridges and roads to spur industrialization. Rural Sindh also suffers from a weak private sector that needs to play a greater role in rural industrialization. He said the basic question in political economy was: why and for whom to invest.

Jamal Mustafa Shoro, SZABIST research scholar, spoke “on federal fiscal transfers: issues and options” and dealt with negative impact of cash development loans (CDLs), extended by the federal government on an interest rate of 18 per cent, on provincial financial health.

Since 1972-73 to June 30, 2003, the Sindh government borrowed Rs52.8 billion. It still owes the federal government a sum of Rs43.5 billion after having repaid Rs9.3 billion as principal and Rs82.8 billion as interest.

A retired government official said that the Punjab government had replaced its expensive debt with cheap borrowings and the Sindh government should follow suit and work out a strategy to retire costly cash development loans.

In his presentation on “budget and fiscal de-centalization”, Economist Mohammad Sabir of the Social Policy and Development Centre said the bulk of the local government money is spent on salaries and very little is left for developmental activities.