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These columns have been copied from Dawn and pasted here with necessary annotations and notes for the students of Nova CSS Academy.
Reading the IMF programme
Khurram HusainUpdated July 04, 2019
THE executive board of the IMF has approved Pakistan’s request for accession [acquisition, حصول] to a three-year, $6 billion programme. The programme now begins and the first tranche [قسط] of the money will be transferred into State Bank accounts within days.
Equally important, the programme document that details all the commitments agreed to between the Fund and the government of Pakistan will be uploaded onto the Fund website, also within days. This is a crucial document and all those with a keen eye on Pakistan’s economy, and with an interest in knowing where things are expected to go in the future, will give it a careful read. So I thought I’d share some tips on what sort of things to look for in the document that a layperson could understand, and that will reveal important details about what to expect for the next three years. This is not some sort of a definitive list, and others may well point out other areas that will also be of critical interest.
First thing I would look for are the projections contained in the document for the external financing requirements of the country over the next three to five years. Since debt and its management have become such a critical agenda item in this government’s economic self-awareness, this figure will tell us what sort of dollar inflows will be required all this year and the next two years to manage financing requirements. These include debt-service obligations, repayment of principal amounts as well as private-sector liabilities that will need to be met from the country’s foreign exchange reserves.
The fact that this programme has been drawn up after an in-depth examination of CPEC financing requirements means that in this programme document we will get a first, authoritative look at what sort of financing commitments Pakistan has to meet to pay for CPEC investments under the early harvest programme that have been by now largely completed.
To understand the figures and projections given in the programme document it would be helpful to see how this figure has been reported in previous IMF documents. I have written about this in the past but it is important and bears repeating.
There are three Fund documents prior to the one that is about to be released where the projections for external financing requirements are given, and these vary sharply in each. One is the post-programme monitoring report issued in March 2018, after Pakistan had completed a three-year programme that began in 2013. The other was an Article IV report released in July 2017. And the third is the last review of the previous IMF programme that was issued in October 2016. Between them, these three documents provide three separate snapshots of what the projections were saying for Pakistan’s gross external financing requirements, and something interesting happened when you looked at all three one after another.
In October 2016, the projections showed that Pakistan’s external financing requirements will rise from $15.8 billion in FY2019 to $17.5bn in FY2020. For perspective, we have just completed FY2019 and have just begun FY2020.
These columns have been copied from Dawn and pasted here with necessary annotations and notes for the students of Nova CSS Academy.
By July 2017, the projections in the Article IV report showed that the same requirement will rise from $16.9bn in FY2019 to $20.5bn by FY2020. And then, less than a year later, when the post-programme monitoring report was released in March of 2018, external financing requirement for FY2019 was projected at $27bn, rising to $33.8bn by FY2020.
What this means is that projections on external financing requirements, which include financing the current account deficit, debt amortisation[gradual elimination of the initial amount] and payments of short-term debt from the previous period, nearly doubled between October 2016 and March 2018 (less than two years). What exactly drove this increase was never explained, nor do I know of anyone who went digging into these numbers.
Suffice it to say that in the latest of these reports, the current account deficit was projected to come in at $15.7bn in FY2018 whereas in reality it came in closer to $19.9bn, so the real figures given in the report to be released in the next few days will be higher still.
The latest projections from the monitoring report of March 2018 projected these requirements rising sharply in the years to come. In FY2023 (three years forward) the projected external financing requirement was shown as $45bn in the March 2018 report. The report to be released in the next few days will be the next snapshot we have on this figure, and if it is considerably higher, we will know that questions need to be asked about the drivers of this increase.
Of course, economic numbers don’t make sense on their own. They either make sense when shown in a series or as a proportion. So the next thing to look at will be what the projections are showing about exports (not that those often pan out), and foreign exchange reserves over the programme period. If that gets too technical for lay readers, it is enough to leave it at this: keep an eye out for this figure (gross external financing needs). If it has risen significantly beyond what the last projections were showing, we’ll know something is up.
Beyond this, the fiscal deficit figures will be important. The government has launched a ferocious [aggressive and cruel] budget that seeks a historic increase in revenue collection. If the fiscal deficit targets for the subsequent two years of the programme are similarly fierce, we’ll know the ferocious hunger for revenues is here to stay for a while longer.
Of course, the key in all these programmes is the structural reforms that the government commits to. Those are also the ones they never deliver. So if you’re feeling enthusiastic and earnest, go ahead and peruse what the commitments are regarding the state-owned enterprises, especially in the power sector.
The writer is a member of staff.
khurram.husain@gmail.com
Twitter: @khurramhusain
Published in Dawn, July 4th, 2019
Winds of war
F.S. Aijazuddin
Updated July 04, 2019
THE world is not yet ready for a third world war. President Donald Trump is.
At his inauguration in 2017, many wondered how long it would take Trump to realise that he was president of all 50 states, and also commander-in-chief of the most formidable war machine history may every see. He came close to using it recently in a strike against Iran but, as he admitted, was deterred 10 minutes before the giving the final order — not by his Cabinet or his National Security Council, but by the advice (it is said) of a tele-news anchorperson.
Is this to be the genesis of wars to come? Will such impulses replace sober aforethought or palliative [which relieves pain] diplomacy?
Of late, states have begun to talk to each other through their leaders. More recently, the G20 summits have taken on a special significance. That conclave[conference, meeting] of powerful countries which matter has left the United Nations superfluous[redundant], and rendered shuttle diplomacy between capitals as archaic as its arch-practitioner, the nonagenarian [a peron between 90 and 99 years of age] Dr Henry Kissinger, himself is.
The techniques Dr Kissinger used no longer have a place in this age. Tweets are the new lingua digitalia [language spoken by all in the digital space] of diplomacy. His experience as a negotiator, however, remains sans pareil [ایسا ٹیلنٹ جس کو کوئی نہ پہنچ پائے].
A recent book Kissinger the Negotiator (2018) analyses Dr Kissinger’s interventions almost everywhere in the world, even where US interests were not affected or whether a crisis existed or not. Interestingly, the book identifies one of his successes as the way Dr Kissinger (who, unlike the British, had no familiarity with the complexities of white rule in African territories), managed in 1976 to persuade the recalcitrant rebel [باغی جو کسی طرح تعاون پر تیار نہ ہوں] Ian Smith, who had declared an independent (white-governed) state of Rhodesia, into accepting the inevitability of majority (black) rule.
Dr Kissinger’s ego does not have space enough to store the debris of his defeats. The book offers them alternative accommodation in its pages. It mentions a few. Of relevance is Dr Kissinger’s failure to persuade Pakistan to roll back its nuclear programme. According to the book, in August 1976, Dr Kissinger flew to Pakistan and offered prime minister Mr Zulfikar Ali Bhutto continued annual aid of “$100m plus 100 A-7 military aircraft and additional military aid”. The offer was refused.
Dr Kissinger returned after President Carter’s election with an improved offer of “substantial military and economic aid and US support to obtain the basic infrastructure for a nuclear energy programme, all in return for an ‘indefinite postponement’ of Pakistan’s nuclear weapons programme.” Mr Bhutto rejected each of these blandishments[کسی کا اعتماد یا امداد حاصل کرنے کیلئے اسکو خوش کرنے والے بیانات]. That is when (so legend has it) Dr Kissinger angrily exploded with: “Then we will make a horrible example of you!” In 1979, the scaffold [پھناسی کا تختہ یعنی بھٹو کی پھانسی] became that example.
Mr Bhutto’s was a singular sacrifice. One million North Vietnamese paid collectively for resisting the US. The book reminds our pampered generation which has never experienced genocide on such a scale: “The tonnage of bombs dropped on North Vietnam exceeded that dropped on Germany, Japan and Italy during World War II.” Despite this ‘coercive[کسی کو ڈرانے پر مبنی] diplomacy’, the US lost South Vietnam, and Dr Kissinger walked away with an undeserved Nobel Peace Prize.
President Trump will never have the time to read Kissinger the Negotiator, no more than he has had the time to consult that ageing sage, as all his predecessors from John F. Kennedy onwards had done. He could, however, benefit by speed-reading this quotation by the American political scholar Richard Neustadt: “Reality is not bilateral.”
Apply this to the US’ increasing threats to Iran. President Trump’s reality is not mirrored by Iran. Iran knows the US better than Trump knows Iran. Attacking Iran would be like provoking a tiger in an unlocked cage. Trump’s ham-handed ‘coercive diplomacy’ of sanctions against Iran and its Supreme Leader personally is flawed. Iran’s oil will seep through back doors to its clients, just as Iraq’s did during the period of US sanctions against Saddam Hussein. Iraqi oil was then traded with US and UN approval under the euphemism[اصل کی بجائے زیادہ خوبصورت الفاظ ] of an ‘Oil-for-Food’ programme.
President Trump has made clear who his enemy is: Iran. Who are his allies in this warm-up to the third world war? Look no further than the group photographs of G20 summits held at Buenos Aires in 2018 and recently at Osaka. In Buenos Aires, Saudi crown prince Mohammad bin Salman stood alone, a pariah after the Khashoggi murder, relegated in the group photograph to the end of the second row. Six months later, in Osaka, Trump placed the Saudi crown prince next to himself, co-primus inter pares. The price for such lethal proximity [قرب] can be high, as the late Shah of Iran discovered.
President Trump has brought the prospect of a third world war to our doorstep. He is prepared. Iran is. Are we another Muslim nuclear power ready for the fallout?
The writer is an author.
www.fsaijazuddin.pk
Published in Dawn, July 4th, 2019
These columns have been copied from Dawn and pasted here with necessary annotations and notes for the students of Nova CSS Academy.
Why is won't work
Syed Bakhtiyar Kazmi
Updated July 04, 2019
IN a nutshell, from experience alone, this economic plan is unlikely to work; why? Because six years ago we did exactly what they (the IMF) said for three years — with the net result that we are significantly worse off today.
And since they have consciously or unconsciously always prescribed the same medicine for patients like us, the world over, irrespective of the symptoms or ailment — which medicine, it can historically be proven, only added to the sufferings of those it purportedly [as reported to be true] was treating — why would it be different this time?
Of course, the GDP may improve again for a bit, albeit [although]this time around that will require some serious fiddling and a lot more luck than just low oil prices, and the casino business will be booming again; but they accomplished all this the last time too, except what was really broke never got fixed — the real economy.
One is at one’s wit’s end, forever trying to comprehend this strange obsession with GDP; conspiratorially[based on conspiracy] speaking, the developing world has been brainwashed to run after this useless indicator, similar to chasing the taillights of a truck.
This time we have a bigger national debt and trade deficit.
Nonetheless, considering the mess we were in, and the way the global financial systems are deliberately stacked against the ‘trying to be free’ world, there really was no other choice but to buckle under [bend under pressure].
So, IMF, we are back; and this time around we have a bigger national debt and an even bigger trade deficit.
If not for the unending desire of the political elite to get elected by hook or by crook, including promising expensive lollipops to the voters, it can be argued that we might have sidestepped most of the white elephant type projects, and perhaps curtailed our debt.
If democracy had not forced the power hungry to buy votes, to the extent that we even subsidised luxury vehicles and other toys of the rich, let alone pay a crazy wheat support price which never got to those for whom it was supposedly intended, would the nation have racked up a monstrous debt, landed in a unassailable debt trap, and sold its soul to the devil? Probably not.
And those were not the only mistakes we made.
We partied endlessly on subsidised imported burgers, soft drinks, French fries and chocolates, and now wonder about the horrendous [horrifying]trade deficit and monstrous external debt; hilariously the solution that has been dreamt up is not to stop partying on subsidised imports, but selling subsidised State Owned Enterprises — the solution is rather reminiscent [reminder] of the line from the Bard: “what fools these mortals be”.
Clarifying for the benefit of the uninformed mostly found on the idiot box, all of this is not based on fantastic assumptions; these are facts based on hard-core numbers, and the very few who understand numbers can vouch [یقین اور تجربے کی بنیاد پر کہنا] that while everybody may lie, numbers do not.
‘Fantastic assumptions’ is reminiscent of an old joke which rather aptly puts in perspective our propensity to search for imported technical advice for everything, rather than working hard and diligently ourselves.
We are obsessed with everything imported.
The joke: a physicist, a chemist and an economist are stranded on a desert island with a single can of food. How are they to open it? The economist answers: “assume we have a can opener...”
Doubtless, irrespective of whatever they might assume, higher interest rates will not get you a can opener, nor will a weaker rupee get you one, nor will the government spending less on development will make a can opener, nor can a lower fiscal deficit produce a can opener.
The only way to get a can opener is to manufacture one, and here is where we made the wrong choice; rather than making a can opener ourselves, we went with the economist’s suggestion, based again on the fantastic assumption that the better option is to buy one from someone who has a comparative advantage.
It never is the better option.
The imported one is definitely shinier, and it has those fancy buttons, and the cabin crew is so efficient and polite and smart, and the food tastes excellent; but you have a hole in your pocket and simply cannot afford an imported can opener, and you also don’t have the plates to print dollars.
So what will work?
These columns have been copied from Dawn and pasted here with necessary annotations and notes for the students of Nova CSS Academy.
Rather than getting drunk on borrowing, you should only have bought from elsewhere that which you couldn’t produce yourself, even if what you produced was older or less shiny; the state used to have this very mantra until it fired the watchdog over imports, and all hell broke loose; no marks for guessing that, once again, the genesis of this horrible decision was recommendations from the economists and their fantastic assumptions.
Bring CCIE back!
The writer is a chartered accountant based in Islamabad.
syed.bakhtiyarkazmi@gmail.com
Published in Dawn, July 4th, 2019
Hope for the disappeared
I. A. Rehman
THE return home of some of the Baloch missing persons, the Balochistan home minister’s optimistic forecast, and the good tidings conveyed to Akhtar Mengal are welcome developments but they raise more questions than they answer. From whose custody are these people being recovered and why was this not possible earlier?
Besides, the question of impunity [سزا سے استثناء] remains unaddressed. Also ignored is the urgency of strengthening, in terms of human and financial resources, the Commission of Inquiry on Enforced Disappearances (CoIoED) whose incapacity to deal with the matter is causing much distress and frustration to the affected families.
We can judge the performance of this body by its own reports for March and April, 2019. First, some bare facts.
The total number of cases received by the CoIoED till the end of April 2019 was 6,051; cases received during March and April: 62 and 136 ie 198; cases disposed of till the end of April: 3,783; cases pending on March 31: 2,181; cases pending on April 30: 2,258.
The receipt of 136 fresh complaints in April means that the number of enforced disappearances still being reported is quite high and that the backlog of cases pending before the CoIoED — 2,258 on April 30 — is also sizeable.
Even as some of the missing return home, the question of impunity remains unaddressed.
The region-wise breakdown of complaints received from March 1, 2011, up to the end of April 2019 is as follows: Punjab —1,271; Sindh — 1,512; Khyber Pakhtunkhwa — 2,277; Balochistan — 408; Islamabad — 256; Fata — 265; Azad Kashmir — 53; Gilgit-Baltistan — eight.
It is difficult to accept as correct the statement that the number of involuntary [غیر رضاکارانہ، اپنی مرضی کے بغیر] disappearances in Balochistan over the last eight years has been lower than in Punjab or Sindh. The only plausible [ٹھوس]conclusion is that the wretched [بے چارے] citizens of Balochistan are too resourceless or too scared to even report enforced disappearances. And official apathy [بے حسی] makes Akhtar Mengal angry.
During March-April 2019, the number of missing persons traced was 117. Those returning home numbered 64, while 53, ie 45 per cent of the persons traced, were not that lucky. Thirty-five of them were found in internment centres set up under the Actions in Aid of Civil Power Regulation issued for (former) Fata in 2011, 16 were found in jails facing a variety of charges, and two were reported dead and buried.
These cases raise some disturbing questions. The regulation of 2011, under which the internment centres are maintained, lapsed in the whole of KP following the Fata merger. But this regulation has been kept alive in the Provincially Administered Tribal Areas under a new law that is clearly in conflict with the Constitution.
Some of those detained at internment centres had disappeared long ago. Rahimullah, belonging to Swat, disappeared on Dec 29, 2001. He has been found at the internment centre at Paithon (Swat), a DSP told the CoIoED. No information is provided as to when the detainee arrived at the centre, why he is being detained, and why was it impossible to inform his family for 18 long years? Even if a detainee is accused of a serious crime there can be no justification for punishing his family members by keeping them in the dark and preventing them from taking the lawful course of action for his release.
Similarly, Farmanullah, from Mohmand Agency, disappeared in October 2010. An FC officer has told the commission that he was “presently confined at the internment centre at Ghalanai” and that his father had been informed of his whereabouts; he was informed after eight years!
Those traced in jails include several persons whose trial in military courts has been suspended, as the act authorising trial by the courts has not been extended beyond Jan 6 this year. This group also includes Ameer Zaib, from Lower Dir, who disappeared in 2013. Military intelligence has informed CoIoED (no date given) that he had been sentenced to death (when and what for?) and was being held at the Kohat district jail.
The cases of the 64 ‘missing’ persons who have returned home during March-April this year also merit scrutiny. The largest group comprises persons whose return has been reported by intelligence agencies, police officers and executive officials. The relatives of missing persons who confirmed the latter’s return home offered no details about the victims’ ordeal except for mentioning the period of disappearance, which varied from 14 days to four years.
About a score of returnees appeared before the commission but they declined to disclose what had happened to them. A few said they had gone away somewhere (on a tableeghi mission, for example) while a majority said they had been picked up by unknown persons, kept at unknown places and then released.
An exercise that doesn’t include identification of those responsible for enforced disappearances, and doesn’t provide a basis for the grant of compensation to the victims is a mockery of inquiry.
These columns have been copied from Dawn and pasted here with necessary annotations and notes for the students of Nova CSS Academy.
The functions of the CoIoED, as given in the notification about its formation, include the following: i) to fix responsibility on individuals or organisations for enforced disappearances; ii) get FIRs registered against those found prima facie responsible for enforced disappearance; iii) “recommend Standing Operating Procedures (SOPs) to be adopted by all law enforcement/ intelligence agencies through which the arrest/ detention of a suspected person could be declared under the provisions of existing acts/ rules”.
If the commission had fulfilled its tasks mentioned above, the victims’ families might have suffered less.
It is impossible to blame the CoIoED alone for this unpardonable situation. The commission is short of resources, both human and material. It is without a head since its chairman, retired justice Javed Iqbal became chairman of NAB in October 2017 but has not relinquished[چھوڑ دینا] his CoIoED charge. An attitude of indifference prevails in the corridors of power. Civil society too seems to have given up the ghost[مر جانا]. It must demand now that activist-journalist Zeenat Shahzadi, whose recovery was enthusiastically announced by Javed Iqbal, should be produced in public.
Finally, the government must expedite adoption of measures to declare enforced disappearance a penal offence and ratify [توثیق کرنا] the relevant UN convention.
Published in Dawn, July 4th, 2019
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