SBP
Has Committed Crimes of Omission & Commission in its Economy
Report
By
Dr Zafar Altaf
THE
STATE BANK came out with its report on the state of the economy
last week. Normally the report is independent of government and
is always considered to be an independent assessment of the economy.
What and why has this changed so soon?
Instead
of saying something in a straightforward manner double negatives
have been used. Instead of saying that the economy has failed
in some ways and gained in others the SBP uses the art of omitting
vital information. There are some good news and some bad ones
and no economy in the world moves in one direction. So the art
of being too loyal really rebounds.
Crimes
of omission and crimes of commission have been committed in this
report. Let me quote the opening salvo: [the report is not available
in Islamabad, not even in the SBP branch office, not in PIDE,
not anywhere] ‘Despite an impressive improvement in the
macroeconomic fundamentals, a strong and secure external sector,
increased development spending by the government, upsurge in growth
rate, east monetary policy, and quantum jump in private sector
credit, the popular perception about the economy is that the economy
has not improved’. The qualification says it all.
Let
me touch why this has happened. The improvements in the macro
economic framework do not reflect the country’s resilience
in matters pertaining to the economy for it only shows that the
US has been helping Pakistan after 9/11. As a supporter in the
front ranks Pakistan has chosen the path to help the world fight
terrorism and WMD removal. Its help and foreign exchange reserves
of 11 billion dollars is of no avail to the countrymen because
there is no one to use the dollars in the economy in a meaningful
manner.
There
is no diversity in the economy and all that the Pakistani industrialist
is talking about is the textile industry that will take you past
the WTO. Why are they not vary of what they are asking. Well it
may be the last time that they milk the taxpayer because after
the WTO there will be no one to milk. Either they become competitive
or they fall by the way. For if you look at stocks and shares
how could an industry survive when its shares are at an abysmal
low at 4% of its par value. The puzzle has many explanations and
one I have given you. Well it’s a matter of judgment and
I will tell you why and what happened in the export sector.
The
export sector target was 11 billion dollars. Not much but now
the picture is emerging as to how this was done. The bunch led
by the then commerce ministry arranged for the over invoicing
of exports and of sending money to their goons in UAE and Saudi
Arabia. Two things happened as a result. The money returned as
export earnings and the exporters sought rebates on their exports.
Since
the money was limited, the textile sector managed the entire affair
to the benefits of the few. An arrangement was arrived at with
the local customs officials to raise objections on the filing
of rebate requests from genuine exporters and have all of it released
to the few who had played this game in connivance with some one
in the commerce ministry. It had to be at the highest policy level.
All the laurels were theirs and they were riding high.
The
trouble with power structures is that it is blind to its loyalists
and once that relationship develops the rest of the world becomes
a scoundrel. This is now being probed by the CBR. Interestingly
enough while the SBP was playing blind man’s buff, ignoring
realities, the papers were carrying the story of how one Member
Rehmat Bhatti of the CBR had started this probe. Needless to say
he was eased out. But he had played his cards well.
So
Mr. Trader in minister’s garb things that are not honest
and are based on clever ploys must come out. Then wheat was not
allowed to be exported to Afghanistan at Rs. 9,700 per ton [$=58
rupees] and instead it was sold at a much lower rate to Iraq and
with a subsidy of Rs. 3,500 per ton that was provided to PASSCO
and Punjab Food department. Why? Why at $105 per ton and with
a subsidy? Who caused the loss? The farmer I suppose?
That
is the way with these criminally articulated one time students
of Stanford and what have you. There education is for pulling
wool over the eyes of the people. Ralph Waldo Emerson wrote very
early and I quote ‘[there are people].. that accept the
very first creed, the first philosophy, the first political party
he meets—most likely his father’s. He gets rest, commodity
and reputation; but he shuts the doors of truth. He in whom the
love of truth predominates.. submits to the inconvenience of suspense
and imperfect opinion, but he is a candidate for truth, as others
are not’. Difficult to digest in Pakistan at the moment.
There may be more truth in the less educated.
So
far as increased development spending is concerned I have already
in an article on the budget to SA Tribune stated that the development
expenditure had been reduced by –5% in nominal terms and
in real terms this was stupendous. The increased spending is in
the non-development budget where, just to give you an indication,
the increase in expenditure has been more than 48%. All on the
salaries and wages for the favorites.
Further
to illustrate what has happened the expenditure shown for purchase
of P-3 lap top is Rs. 536,000 per unit whereas in Lahore it is
currently selling at Rs.33,000. Where has the balance gone? That
laptop must be uranium enriched. US where are you looking for
WMD? They are here in the economy.
Now
let us come to growth. In the industrial sector the growth has
been in the beverage industry that is adding to a glutton attitude
in the economy. The second area is in cars where again jobs cannot
be created because it is a screw driver job. One assembles and
one makes all these little tit-bits and show it as a deletion
program. Tractors fall in the same category. To the uninitiated
you can say anything about growth. He would not know for you are
talking and convincing a deaf and dumb and the listener does not
want to show that he is uninitiated lest he becomes a joke, albeit
an economic joke. Click to See
Graph
About
agricultural growth I can only say that the Gregorian calendar
or the financial calendar, or the Islamic calendar is not coterminous
with the Agriculture calendar. The result is manipulation by the
policy makers who add on provisional figures of output. These
are purely fictional and out of context. Every one is aware that
cotton is short because of a poor crop and that wheat is no where
what it should have been. These figures are revised later on.
By that time the benefit of the falsehood has been taken.
The
growth rates in the Economic Survey for the last five years show
that the provisional figures have always been downgraded after
the actual figures are out. Thus a positive figure in 2001-02
was reduced to –2.6 and then in 2002-3 a positive figure
of 4.1 has been shown. Even with current price trends the reduction
in growth rate is called for. That is why the SBP is between the
devil, Finance Minister, and the deep sea (truth). And it has
chosen to side with all the devils. R.W. Emerson is valid here
too.
Now
about poverty [the other issues will be dealt with later]. Poverty
according to SBP has increase from 22% to 34% but it is not the
fault of the present government but the policies contributed to
by the actions of the last fifteen years. Poodles. Poverty is
measured in different ways? How and what was SBP methodology?
Have they seen the latest Household and Income surveys? According
to that survey the increase in poverty is now 44.7%. So the last
twenty years were responsible?
It
is important to state one’s case from one’s own vantage
point but when the nation is at stake do you transcend your own
benefits to the one that is for the country’s good. At the
two issues listed by SBP the interventions are going to be lop-sided.
The misery that has been cast upon the farming community has even
led the master poodle [FM] to accept that the poverty in the rural
areas has increased. This is a ploy.
He
then looks hurt because he himself is so poor. His different color
collars are from time past when he emulated his masters of elsewhere.
No sir the diagnosis is full of cheating and willful manipulation
and that is why nothing will come out of it. It will remain a
lament all the time and lament has no answers.
The
final agony piled on the public is that no jobs have been created.
It was 1987 that the Pakistan staff college participants identified
and wrote a paper on this need. Have you bothered to read it?
Has the SBP any idea of what kind of intervention is needed. Is
lowering the interest rate the only way that investment can be
brought in? Has there been any investment? We are living in cuckoo
land and the articulate and the foreign qualified have got together
to look after the needs of the few and to throw chilies in the
eyes of the many.
The
politics of graft and cronyism will not help this country. Loyalty
to the state requires that the truth or likely truth is to be
produced before the public. They seek nothing more. But then truth
can be so unnerving to the coterie of the people who seek pleasures
all the time, at home and abroad. That is there way. They have
done more harm than good to the country. Should they be blessed?
They are in the service of half Gods.
The
writer is a former Federal Secretary, Government of Pakistan
