The economic package

THE long-awaited American package of economic assistance to Pakistan falls significantly short of expectations. Announced on Thursday by President Bush at the conclusion of President Pervez Musharraf’s three-day visit, the package is rather disappointing, given the poor state of the economy and the critical role that Pakistan is currently playing in the context of the US-led war against terrorism. Pakistan expected a substantial write-off of the bilateral debt of 2.8 billion dollars, increased access for its apparel to the US market, tariff preference for imports from Pakistan as has been provided by the European Union, assistance for development projects and restoration of the pre-1990 defence relationship. What Pakistan has actually received is some relief in payment of bilateral debt, enhancement of the quota for Pakistani apparel (which, if properly utilized, would fetch 142 million dollars) and specific allocations, out of the 100 million dollars in aid announced earlier, for education, labour welfare and for technical support for elections due in October this year. In the area of military-to-military relationship, the defence consultative group which existed before 1990 when sanctions were first imposed will be re-established, and the sanction on sales of spare parts would be lifted, the dialogue on nuclear issues will be resumed and cooperation in anti-terrorism efforts will be strengthened.

The package falls short of expectations on three counts: inadequate debt relief, preferential treatment for Pakistani exports has not been granted, and absence of a grant or loan for development projects. There is confusion about the exact volume of debt relief that has been offered. It is not an outright write-off but may ultimately result in one billion dollar relief at the end of the retirement period through the lowering of the interest rate and the lengthening of the repayment period. Another disappointment concerns trade concessions. Quota enhancement would apply to some, not all, categories of textiles and preferential tariff which Pakistan had asked for all its exports has not been accepted for any product. Whatever has been promised by President Bush is subject to the approval of the US Congress.

The direct benefits of the package may not be very impressive but the indirect impact of it on the economy is expected to be quite substantial. The attitude of the IMF, the World Bank and the Asian Development Bank will be softened and the non-implementation of several difficult conditionalities will now be overlooked. Other donors, especially Japan, will be encouraged to enhance the level of their economic assistance. As the US Overseas Private Investment Corporation (OPIC) has been allowed to provide loans of up to 150 million dollars for oil and gas projects, it will enhance confidence of the American private sector in Pakistan.

From a political point of view, the US has promised to remain engaged with Pakistan on a long-term basis and will provide support for the creation of a democratic environment and a modern, progressive and tolerant society. To this end technical support will be provided for the October elections for which two million dollars have been allocated. This technical support will include training of election commissioners, domestic observers and political party monitors. Education has received greater attention as it helps create a tolerant and forward-looking society. It has received $34 million which will be used for curriculum development, teacher training and information technology dissemination. Overall, the economic environment is likely to improve and investment, both domestic and foreign, which was waiting for the right signals is now likely to pick up.

Squatters’ ownership rights

OWNERSHIP rights have been conferred on thousands of residents of kutchi abadis in Punjab recently. According to the Punjab governor, around 90,000 dwellers of these settlements would get ownership rights in the province by August 14. The government also plans to spend about Rs 150 million for providing civic amenities to squatters in various cities. Slums have proliferated because of shortcomings in the housing delivery system and lack of access to affordable housing by the poor. There is a massive gap between demand and availability of low-cost housing. In the circumstances, the poor resort to squatting on available land or approach land grabbers for providing them with land for housing. Cities and locations which are the focus of economic activity naturally attract more people than others. Therefore, major urban centres which provide most employment opportunities are particularly afflicted with the menace.

While granting ownership rights, the governor pointed out that some 20,000 three-marla plots would be allotted to the people on instalments. Also, 1,500 flats will be constructed for providing shelter to people whose monthly income is less than Rs 5,000. Moreover, he said, the rural poor would get 18,000 acres of land at subsidized rates. However, much more needs to be done to provide cheap and affordable housing in the urban and rural areas. On the basis of the 1998 census, optimal demand for housing is estimated at 21.29 million units with a backlog of 2.22 million units. This is likely to grow by about 0.5 million housing units in urban areas. Additionally, 65 per cent of the demand is likely to be in the lower income groups.

Housing schemes usually benefit the middle income groups which often acquire land for investment or speculation. Developers mainly build one-kanal or 10-marla houses to the exclusion of any consideration for the shelterless. It is necessary to initiate schemes to cater to the needs of the disadvantaged sections and discourage indefinite holding of plots by owners by specifying a particular time limit for starting construction. The government can also identify available land for establishing low-cost housing colonies and provide financial assistance from Zakat and Baitul Maal as well as loans on easy instalments to the needy.

Basic health blues

CITING the poor state of health care for mothers and newborns at an international paediatrics conference in Karachi, the Sindh governor said that the situation was worse in Pakistan than in the neighbouring Saarc countries. He said it was disturbing to note that Pakistan’s child mortality rate was as high as 60 out of every 1,000 live births. This means that Pakistan is in need of qualified paramedical help, which should be made available to those who do not have to basic health care.

It is not so much the lack of such facilities close to people’s homes but the absence of qualified paramedics at these facilities that is the real problem. This is particularly true for semi-urban and rural areas where the state-run basic health centres continue to exist on paper but in reality these clinics are minimally staffed, with paramedics preferring to stay back in the cities and not reporting to their duties for days on end. The government has, over the years, invested in basic health care and in the setting up of basic health centres across the country with assistance from foreign donors. The need now is to run this network more efficiently so that it can benefit a larger section of society than they currently do, due mainly to sheer mismanagement and corruption that plague the public health sector.