Default danger over

WHAT had seemed inevitable, almost imminent since Pakistan came under the nuclear-related sanctions in May 1998 and then the democracy-related sanctions in October 1999, has at last been postponed for at least 30 years. Thanks to what Finance Minister Shaukat Aziz called the “amazing and incredible” decision taken by the Paris Club members on Dec 12, Pakistan no more faces the ignominy of an imminent default. In fact, as the finance minister said this has provided Pakistan with a credible exit from its external debt trap. Until now the Paris Club, in its own self-interest, considering the international fallout of a country going bankrupt, had kept Pakistan on a life-line for the past three years by providing it two rounds of short-term debt relief. It was prepared to do the same for a third time this year as well for the same reason. But Pakistan’s bold decision to throw in its lot with the US-led war against international terrorism has brought about a qualitative change in the donors’ attitude towards Islamabad. Hence the exceptionally generous gesture.

The deterioration of Pakistan’s debt situation started in October 1990, when the US slapped sanctions on this country under the Pressler amendment. It created an automatic ripple-effect among the developed countries and multilateral agencies, all of which started ignoring Pakistan’s growing economic plight. The only country which continued to maintain any significant aid relations with Pakistan during this difficult period was Japan. As a result, during the 1990s, Pakistan had to go to the commercial market to borrow to make both ends meet. It even consumed the dollar deposits of its own citizens. Then the nuclear tests, the Kargil war and the military takeover led to more sanctions and caused further deterioration in the debt situation. The two low intensity wars going on, one across our Afghan border and the other beyond the line of control in Kashmir for much of the 1990s also did not help matters.

So, it was not as much bad economic management in the 1990s as it was the politically motivated attitude of the donors, both multilateral and bilateral, which had pushed Pakistan to a point of default in the late 1990s. The present change in the donors’ attitude seems to have very little to do with how we have managed our economy in the past couple of years or how successful or unsuccessful was the IMF’s just concluded Standby Arrangement in achieving macroeconomic stability. True enough, whatever macroeconomic stability is there in Pakistan today is actually the indirect result of the two rounds of debt relief Pakistan has obtained since 1999. Nevertheless, whatever the motives of the Paris Club members, their generous gesture has provided Pakistan enough room to meaningfully restructure the economy and put it on an even keel. However, huge doses of aid, generous write-offs and successful multilateral reform programmes have hardly helped developing countries in the long run. All these things have been tried and failed in many countries, specially in Latin America. Look what is happening in Argentina and nearer home in Turkey. The only way out of poverty is through the path that was adopted in East Asia. The rich world went to East Asia with capital and technology and used the region’s cheap labour to produce economic goods for the developed markets. The result was the East Asian miracle. So, while strenuously restructuring the economy to make it fit the demands of the day, Pakistan must keep pressing for increased access to rich markets and relocation of low-tech industries like textiles from developed countries to Pakistan

KCR’s fate

IT fell to the Naib Nazim of Karachi the other day to raise the issue of the Karachi Circular Railway, which has been off the track for two years now. On a recent official visit to India, the Naib Nazim checked out the public transport systems in Mumbai and Kolkata, and came back impressed with the local train systems in the two cities. As for the defunct KCR, talk about its revival is as old as its closure. The issue does not seem to get anywhere close to being resolved, even though all concerned parties — the Pakistan Railways, the federal, Sindh and now the city governments — agree that the KCR should be revived. What is it then if not the lack of will, more than anything else, on the part of these various tiers and functionaries of the government that has stalled the revival of the project?

The Pakistan Railways closed down the KCR in December 1999, saying that local trains should be operated by the local or provincial government and not the national railways. When the Sindh government protested the closure, Islamabad agreed to revive the project, and the PR offered only the required technical assistance for its revival. Thence began the circus of putting together one feasibility report after another. President Musharraf wants the project revived, and is scheduled to review the technical and financial proposals when he visits Karachi later this month. The Sindh transportation department estimates a cost of Rs1.5 billion just to put the KCR back on track. This does not include any expansion or upgrades, and there is talk of seeking Japanese expertise to straighten out certain technical and traffic engineering problems. Meanwhile, it is most surprising that the Sindh government should have assigned the preparation of the technical proposal to the officials of the PR and all but dead, Karachi Mass Transit Plan — neither has any real stakes in the project. Thus, the feet dragging continues and no progress has been made for two years, as millions of Karachi’s hapless commuters suffer and fear the same fate for the KCR as befell the KMTP.

Islamabad’s water woes

THE three-pronged programme to overcome water scarcity in Islamabad seems to hold out some hope that the citizens’ water woes will come to an end some day. One wonders why such a plan was not conceived much earlier. According to Lt.-Gen. (Rtd) Moinuddin Haider, the interior minister, the Capital Development Authority has already finalized the water-enhancing plan which would focus on the construction of small dams, devising an effective water distribution system and a better conservation strategy involving the citizens’ participation. The minister said that at least one small dam would be constructed every year near Islamabad. Moreover, a comprehensive survey of the existing water distribution system would be carried out with the aim of replacing damaged and rusty underground pipelines.

The CDA should have known well in advance that a time would come when both Khanpur and Simly dams would not be able to meet the requirements of a growing population. Thus, it should have drawn up contingency plans much earlier. Besides, the damaged and rusty pipelines should have been repaired as a matter of routine well before the problem became critical. It was an eye-opener for people to see in the newspapers during the dry spell last summer photographs of precious water gushing out of broken pipelines and to hear of the theft of water by private water tankers. At the same time, the CDA was slapping fines on the capital’s citizens for washing cars and watering lawns. Experience has shown that drawing up plans to tackle any problem is the easy part; the hard part lies in implementing the grandiose plans and obtaining the desired results.