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| May 31, 2007 | Thursday | Jamadi-ul-Awwal 14, 1428 |
Curbing human smuggling
Poor healthcare for children
Overcoming power shortage
AN Asian Development Bank study of the energy crisis in Asia urges the countries in the region including Pakistan to find ways to address the energy issues if they want to join the ranks of the developed countries. The study says the consumption of energy in Asia is increasing so rapidly that by 2011 the continent would be consuming more energy than do the developed countries. And that can be more due to the large population pressure.
A PUBLIC Sector Development Programme (PSDP), estimated to cost Rs520 billion for the next fiscal year, will be presented today before the National Economic Council (NEC) for approval. Going by the critical shortages of energy, water, human skills and modern transportation facilities for an economy witnessing a robust growth of seven per cent per annum for the past four years, a nearly 20 per cent increase over the last year’s budgetary allocation on development spending would not appear to be an over-ambitious target. But the critical issues linked to development spending of this enormous size are the government’s ability to raise the required funds, to use the available resources productively and to bridge the implementation gap. Economic managers are confident that the government’s financial position is comfortable enough to finance the proposed development plan. Official optimism is based on tax revenues exceeding this year’s target and the next year’s potential of a stipulated growth of 7.2 per cent of an economy that has doubled in size over the past five years to well over $143 billion. But there are already fears that with a much lower PSDP at Rs435 billion for this year, it may not be possible for the government to stick to the fiscal deficit target of 4.2 per cent despite its strong commitment so far.
Given the slowing down of the tax revenue growth in the second half of 2006-07, the State Bank, in its third quarterly report released on May 26, cautions that “expenditure growth needs to be monitored.” Rising sharply, the government borrowings were Rs190.5 billion during July-March 2007 — four times the amount borrowed in the same period last year. According to a document prepared by the Annual Development Plan Coordination Committee for the NEC, slower than expected financial releases by the ministry of finance is responsible for tardy utilisation of budgeted funds estimated at Rs150 billion for the first nine months of this year as against the annual federal PSDP of Rs270 billion. Independent economists close to the Planning Commission say that a big chunk of funds not utilised this year would be used for the next budget. About 100 projects worth Rs62 billion are reported to have either been delayed or sidelined for the final quarter of this year. If these reports are correct, they indicate either a lack of funds or second thoughts on the intrinsic worth of the projects.
The implementation gap in development spending has invited criticism that the government lacks the capacity to undertake very large development programmes. While officials claim that the efficiency of financial utilisation has improved by 10 per cent to 60 per cent for three quarters of this year, anecdotal evidence suggests that the government’s capacity to implement projects in time and within stipulated costs is not improving significantly because of the absence of proper planning, designing and monitoring. Cost overruns are becoming more common. While the need for a much larger development programme cannot be over-emphasised to sustain the economic growth momentum, it is equally important to improve the delivery system by bringing about further administrative reforms. In case the development funds are not productively used but are wasted, they would widen the fiscal deficit, raise inflationary pressures and also impact adversely on the already worsening current account deficit. These risks to macroeconomic stability are likely to become more pronounced in an election year.
THE lure of a better life can be irresistible to people grappling with poverty or unfulfilled dreams. Despite the cost and the hazards involved, thousands of Pakistanis still attempt to migrate to foreign lands by illegal means, even though many end up being deported after suffering tremendous rigours at the hands of human smugglers. Others are even less fortunate, drowning in stormy seas, suffocating in trucks and sealed containers or dying in encounters with border police. Yet there is no stemming the tide of those dreaming of greener pastures in Europe, many of whom are well aware of the risks but are willing to stake their safety and lives in a desperate bid to leave the country. Others are duped by greedy ‘travel agents’ who paint a wholly implausible picture of easy passage to the West and rich pickings in a fabled land of plenty. The victims, most of whom are from the rural areas, pay huge amounts of cash to be transported to Europe through Iran and Turkey or the Central Asian republics, Russia and the Ukraine. Many leave their families in debt for the rest of their lives. Some make it and manage to send money home from time to time, but happy endings are few and far between.
Recent reports suggest that as many as 10,000 would-be immigrants from Pakistan may be poised to illegally enter Greece and Italy between now and September. For most, these countries are not the final destination but serve only as entry points, largely because the level of official corruption there tends to be higher than in western European countries. To stem the rot at the source in Pakistan itself, action must be taken against the agents and the human smugglers they represent. These people are well connected and not unknown to the police. If they are rounded up and prosecuted under the law, large-scale illegal immigration is bound to be largely contained because few migrants have the wherewithal to venture abroad independently. It also bears contemplation why so many citizens are so eager to leave the country for good.
ALTHOUGH the mortality rate for children under five years of age has been slowly declining over the years, it is still a cause for concern and is indicative of the deficiencies in the government’s overall policies relating to child health. Currently, the infant (up to one year of age) mortality rate is 80 per 1,000 live births while the figure for the under-five category is 101. This is disappointing, because, as pointed out by speakers at a workshop held in Karachi the other day, a majority of children die from preventable illnesses. Hygiene, proper sanitation, clean drinking water, adequate nutrition and routine immunisations can avert a number of deadly infections that claim thousands of infants every year. However, these remain unavailable to large sections of the population who live far away from medical centres and whose poverty and ignorance about disease is largely responsible for their offspring dying young. The male bias in society also has a role to play in this, for families prefer to concentrate on the health of their sons often at the cost of their daughters.
Many of these shortcomings could be rectified if the government attached greater priority to the welfare of the young population. Health, like education and all other sectors affecting children, has been denied the required priority, and improvement will be slow as long as the government does not revamp existing medical centres and build new ones throughout the country, besides increasing the number of doctors and nurses there. Moreover, regular programmes on educating mothers about the basics of hygienic living and routine vaccinations should be conducted in remote villages where the situation is particularly grim. Malnutrition and disease can only be contained through preventive and curative measures and the political will to deliver on the various promises made on children’s health from time to time.
The ADB sees no scope for complacency or dilly-dallying in this area by the Asian countries which seek to catch up with the developed countries fast.
Electricity in a country like Pakistan cannot be increased rapidly by using hydel power channel. It can be increased only through the thermal system. And that is being urged at a time when the Brent crude has risen to 72 dollars a barrel and may rise further if an oil crisis develops in one country after another.
In this context there is a welcome news from Australia. A company there has devised a method of producing power from coal cheaply and is ready to work on the Thar coal after the Chinese company which had been negotiating the price of Thar power has finally given up. The Australian option is certainly a welcome one. A Pakistani company, Hassan Associates, is also setting up a unit to produce power from coal in Thar.
Meanwhile, we are looking for the results of the alternative energy quest in varied directions instead of merely conducting more of experiments. Too much time has been spent talking about alternative energy and too little results produced. We need some real results in this area.
We have not only the shortage of power but also gross mismanagement of the supply of the power we produce. It is one thing to have the shortage under a planned load-shedding arrangement and quite another to have prolonged load-sheddings compounded by frequent interruptions in supply which may last even longer. If power goes off only due to the planned load-shedding, the citizens can readjust their work schedules. But when the load-shedding comes along with frequent breakdowns in supply which can be too many, one is at a total loss. The prime minister wants Wapda to avoid unscheduled load-shedding but it is difficult to plan against frequent breakdowns.
When the system is too old as KESC’s and ill-maintained it is bound to collapse too often. A weak system if diligently looked after can produce good results, but when the system is old and weak and its maintenance too poor it is bound to collapse too often and cause distress to consumers.
There are consumers who prefer the battery-powered UPS to the power generators which need diesel oil regularly. But the UPS system also fails if the discontinuation in power supply lasts four hours.
We are now promised power from various sources by the private sector producers and they include a large expansion of the HUBCO output. One hopes that most of these power units will be ready on schedule, if not all, to boost the KESC system. It is being said that these units may raise the cost of power to 15 rupees per unit, but for the cheap hydel power we will have to wait for the five mega dams to be completed one after another. The mega dams have their mega teething problems including finding enough funds through external borrowing. Let us hope the relief we may get from the thermal power output through private sector initiatives will not make the government slow down the pace of its mega dam projects which will also supply irrigation water for agricultural production.
The prime minister says exports this year will miss the target of $18.6 billion marginally and yet the economic growth will be 7.02 per cent which will be higher than last year’s 6.6 per cent. He is also coming up with an Annual development plan of Rs520 billion. At the same time the State Bank of Pakistan’s third quarter report for 2006-07 says the imports which have already recorded a trade deficit of 11 billion dollars in the first 10 months of the year, will not come down. The principal reason is the larger import of furnace oil for power production by the private sector. Along with that the power generating machinery has also to be imported by the private sector. The oil import bill for the next financial is a staggering $8.8 billion, the largest single import item. That underscores the urgency for energy conservation. That is done more in words than in deeds.
The State Bank has cautioned exporters that they will have to be far more competitive particularly in textiles. The China-specific embargo on the export of certain textiles to the United States and European Union will come to an end by 2008 and Pakistani exporters will have to be ready to face strict competition from the Chinese as both markets are also the markets of Pakistan.
Meanwhile, the European Union has told Pakistan that it is too early to conclude a free trade area agreement. The fact that EU has signed an FTA agreement with India does not entitle Pakistan to claim a similar privilege. “We need to understand each other better,” says the new EU commissioner. Committees are being setup to work out details. Meanwhile, the ban on exports of Pakistani fisheries to the EU continues and that the ban on permitting PIA planes, other than the latest ones, land in Europe has not been lifted.
So, it may be easy to sign an FTA agreement with Malaysia next year as the Pakistan government has agreed to lower the high import duty on Malaysian palm oil at a time when the world prices of palm oil are crossing new peaks. And it may be easy also to sign an FTA agreement with Jordan as Amman had suggested such a deal.
Pakistan is eager to finalise an FTA agreement with the US earlier but the latter is in no hurry as in trade matters it moves cautiously. It wants first to sign a business investment treaty which is taking long time.
Meanwhile, Pakistan’s image in the international financial market has improved a great deal. Its Euro bond attracted ten times more funds than it sought. So instead of accepting $500 million it raised an amount of 750 million dollars at 6.875 per cent interest which is half a percent lower than last year’s. Pakistan’s image in this area is very good as it has honoured its commitments in full and on time and pays handsome interest.
It is also encouraging to know that the internationally famous Nike is resuming the manufacture of its shoes in Pakistan which it had stopped on a charge of employing child labour.
Now while the government claims to have brought down the poverty rate by 10 per cent and the unemployment rate is said to have come down to 6.2 per cent from 8.3 per cent, around 10,000 Pakistanis are reported to be planning to enter Europe illegally through Greece and Turkey after paying a very heavy price to recruitment agencies despite grave risks involved in such attempts. The government has to come down heavily on the agents in this diabolic business and their patrons at home regardless of how high they are.
The government is also to make strenuous efforts to create new jobs in the private sector and pay them decently, though not Rs10,000 minimum, as demanded now as a reflection of inflation. The small and medium enterprises have to be promoted more vigorously and the micro finance facilities made more widespread and effective.
And more vigorous efforts have to be made by the government to get more jobs for Pakistanis abroad, in Malaysia and the Gulf countries in particular. Of course, they all demand skilled labour and we have to train more labour in various skills. The government has also to fight inflation while the food inflation has risen to 9.6 per cent in a year to make the wages meaningful.
The prime minister has asked the provincial governments to regulate prices of essential commodities, particularly of wheat with a bumper wheat crop being harvested now. There is a surplus of 1.5 million tones of wheat and yet the prices of wheat have risen and despite the government ban on its export, prices are still rising. The prime minister wants the provincial governments to take action against hoarders and profiteers although they are not scared by such threats and go their own way. Will there be any difference now?
We have a peculiar economy; the higher the production, the higher the price. Cement production is supposed to record a peak output of 45 million tones yet the price has gone up by 10 more rupees per bag.
Although the government wants to give a free hand to traders and businessmen to promote higher economic growth, it has stopped the export of gram pulse as this is an election year. And it wants to provide for few provocations to people when it is preoccupied with the judicial issue.
But it needs the cooperation of traders and industrialists who should not exploit the situation to their own advantage. Higher economic growth benefits them immensely. But they should be ready to share its benefits with the masses, instead of making the trickling down impact too little and too late.