June 08, 2006	Thursday	Jumadi-ul-Awwal 11, 1427

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LAHORE, June 7: PPP central information secretary Sherry Rehman has condemned the federal budget as one of the most controversial policy statements ever produced by the military regime.

“Not only has this budget been made quietly in the back rooms of the PM’s secretariat, with no input from the regime’s own parliamentarians, it is based almost entirely on false statistics, contradictions and hollow claims,” she said in a statement on Wednesday.

In the face of rising poverty and unemployment, said Ms Rehman, what the country had was an economy being run on a set of glaring paradoxes, which include; low income and high consumption fuelled by consumer financing; low revenue and high public expenditure; and low deposit rates and high lending rates with a banking spread of 7.75 per cent.

She said instead of protecting the growing ranks of poor people, the regime was rewarding an importers’ mafia and celebrating a growth plan that was making only the rich richer and the poor poorer.

“Instead of providing relief to a nation which is witnessing economic suicides for the first time in history, the regime refuses to cut its expenditures which benefit the huge civil and defence machineries.”

According to Ms Rehman, most of the figures used were unreal with fudged statistics under different heads. Many questions remain unanswered, and unfortunately, given past budgetary practices, will remain non-transparent to the public or its representatives, she said.

If the regime was not juggling its numbers, asked Ms Rehman, why had it not appointed a director for the Federal Public Service Commission for the last three years?

“This is one of the key places where statistics are fudged, and base-years changed in order to project high GDP. The regime is also juggling figures and inflating the new per capita figure of $847 by artificially lowering the population growth rate to 1.2 per cent, since per capita is calculated by dividing GDP by population growth rate. So, how has the population growth rate suddenly gone down from 2.6 per cent, when all independent estimates project it at as much higher than the new official figure.

“As far as growth is concerned the regime is projecting it at 7 per cent for the financial year 2006-07, claiming this can create 1.5 million jobs annually. The PPP rejects this false claim as nothing but an empty promise like those made in previous years. The regime has never met a growth target that is proclaimed in the budget since it seized power in a coup d’etat in 1999. There can be no growth unless the inflation rate is brought down to 5 per cent or less.”

She said: “On June 1, 2006, again the regime announced a reduction in poverty by claiming that the old poverty figures were wrong. In fact it is the regime which is wrong, and the PPP rejects this budget as anti-poor and non-representative.”

Ms Rehman said one of the biggest lies being peddled to the people was about the end of government borrowing to sustain its expenses. In fact, the regime claimed last year that the begging bowl had been broken by repaying debt and ending aid dependence. So could it explain the new World Bank loan worth $6.5 billion that it was congratulating itself on?

“Pakistan is now securely in the grip of a debt cycle never witnessed before. The military regime, like its predecessor, Gen Zia, takes loans on the commercial market at much higher interest rates than the IMF ever gave. If you look at the fine print in the Economic Survey, you can see that even for this financial year external debt and liabilities have gone up to $36.557 billion for the first nine months, showing a rise of 0.723 billion. And none of these rises ever went through parliament, as the Fiscal Responsibility Law brought in implied,” said Ms Rehman.

“Because of this profligacy in government borrowing, foreign debt servicing has also gone up from Rs45 billion to Rs48.7 billion. So all foreign debt trends in absolute terms show an upward graph. Domestic debt has also gone through the roof at Rs58.8 billion from last year’s budgeted figure of Rs34.1 billion, which itself represents a huge jump in government borrowing, and relies again on loan-shark commercial rates.”

As for its trumpeting on Foreign Direct Investment, the PPP leaders said privatisation was the only source of small-scale foreign investment for this military regime, but all of it had been non-transparent and controversial.

“KESC can no longer supply power to Karachi; the Steel Mill process has been stayed by the Supreme Court; and PTCL and MCB still remain challenged by its workers for no protection against retrenchment. And for the first time in the history of Pakistan, privatisation proceeds are being spent on meeting deficits in current expenditure.”

She said last year’s non-transparent sale of Pakistan’s assets generated Rs90 billion, which were used to finance bullet proof Mercedez and almost 800,000 a day spent on President House. No elected government could afford to use privatisation proceeds like this, said Ms Rehman.

She said the governments used the income to retire public debt, not fund junkets and VIP movement costs, which alone cost the nation Rs1.2 billion this year, not to mention several precious lives in waiting for insecure leaders to travel with decoys and escorts that paralyse cities.

She said the growing level of poverty remained essentially unaddressed. “What use is a 15 per cent pay raise to a Grade 1 government servant, or the fixing of a minimum wage at Rs4,000 from Rs3,000? It is a well documented fact that 70 per cent of Pakistan is living under $2 a day, or Rs120, which makes the number given by the regime as one divorced from ground realities.

“Here too the regime dishonestly refuses to use the international level of poverty measurement index which is one dollar a day. No substantial cuts were announced in the fiscal deficit of Rs373 billion, which constitutes 25 of the budget, and which would have lowered inflationary pressures. Who is going to buy moong from a handful of utility stores in the country, and who is going to find a price magistrate in a district of over one million people,” she asked.

She said: “When prices of sugar have quadrupled in only five years, lower than prices in India, the government protects the sugar barons who are its ministers, while NAB is used to persecute the political opposition and institute false cases against Mohtarma Benazir Bhutto? Why have NAB’s expenditures spiralled to Rs797 billion? Does it really need to spend 2.1 million a day and 25 million a year on foreign trips? This regime is clearly not sincere in its objectives, and is only interested in a budget which it can fudge to please it donors.”