Loud Thinking

Archive for the ‘World Bank Affairs’ Category

 

Now our economic malaise has reached such a stage that business as usual, is going to jeopardise our statehood, not in years, but in months.

This situation can be gauged from the following facts, derived from the State Bank of Pakistan report of September, 2014:

a). Interest payments on domestic debt grew by 80.5 per cent to Rs188 billion in July 2014 from Rs104bn in the same month last year.

b). The debt servicing on permanent debt jumped by 306.7pc in July 2014.

c). The government had to pay Rs147bn in July this year as debt servicing on permanent debts compared to just 36bn a year earlier, a rise of 306.7pc. The permanent debt rose to Rs3.999 trillion in June 2014 while it was Rs2.174tr in June 2013.

d). The debt servicing as percentage of GDP in FY14 was 4.1pc, which was 40.7pc of tax revenue.

e). Debt servicing was 27.5pc of current expenditure in FY14 compared to 24.7pc in FY13.

When we take fresh loans (on very harsh conditions and extremely high interest rates) to payback the old loans, it is a straight forward admittance of the fact that we have gone bankrupt.

However, instead of stemming the rot, by re-building the economy of the country with prudent internal financial management, detailed as below, the government is pursuing a disastrous policy of running the economy, on loans and increasing the rates of taxes and utility bills:

– Adoption of strict financial discipline, under the guide lines of stringent austerity measures.

– Implimentation of strict administrative and legal steps for reduction in world’s highest rate of corruption (which was estimated few years ago by the chairman NAB to be more than Rs.12 billion per day or Rs.4380 trillion or $43.8 billion per year, compared with FY15’s entire budget of Pakistan, which was equal to Rs.4 trillion or $40 billion).

– Enforcement of very strong administrative and legal measures, for drastic reduction in huge theft of taxes and utilities.

In this connection, it may not be a wrong indicator that this nuclear power nation called Pakistan, was being mortgaged with the foreign powers, by design.

In this regard, the following excerpts from the book titled “Confessions of an economic hit man” by John Perkins, are very relevant to the prevailing situation in Pakistan:

i). Economic hit men {EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources. Their tools include fraudulent financial reports, RIGGED ELECTIONS, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.”

ii). “Claudine pulled no punches when describing what I would be called upon to do. My job, she said, was “to encourage world leaders to become part of a vast network that promotes U.S. commercial interests. In the end, those leaders become ensnared in a web of debt that ensures their loyalty. We can draw on them whenever we desire — to satisfy our political, economic, or military needs. In turn, they bolster their political positions by bringing industrial parks, power plants, and airports to their people. The owners of U.S. engineering/construction companies become fabulously wealthy.”

Hence, there is no need to emphasise upon the fact that the degree of the sovereignty of a country, is directly proportional to the state of the economy of that nation.

Actually, in constant growth and development, lies our salvation. Secondly, we Pakistanis must know, that without any doubt, the easiest and surest way of moving ahead, is to stand on our own feet.

Foreign aid, can keep us afloat, but won’t allow us to swim.

Now, the time has come to separate the issues of growth, development, health, education, eradication of poverty & security of Pakistan, from the politics; forever.

It has been a shrewd political tactics in the past, by the all and sundry, particularly by those at the helm of the affairs of the country, to divert the attention of the masses, from the real issues being faced by the teeming millions of Pakistan, by mud slinging on opponent politicians, civil and military servants, judges etc. etc.

However, now we must put a full stop to this non-sense, which has wasted the entire life of Pakistan, spread well over nearing seven decades.

Since, its a matter of impending economic collapse of the country, for which almost all of us are responsible, in one way or the other; and almost no one is exempt from the charge of damaging the cause of the country; we must decide to look forward and forgive and forget each other’s sins of the past, and take each and every segment and political force of the society in confidence, for a very transparent scheme of our future development.

In this connection, Mr. Steve Maraboli has very appropriately said that “Make a pact with yourself today to not be defined by your past. Sometimes the greatest thing to come out of all your hard work isn’t what you get for it, but what you become for it. Shake things up today! Be You… Be Free… Share.”
Nothing can match the benefits of the collective wisdom.

Let us build a new economically strong and politically stable Pakistan, by our collective, prudent and wise decisions: knowing very well that no political party, group or institution is so strong, to run this country single handedly, for a sustainable period, without the help and cooperation of each other. We must also realise that our personal safety and better future, lies in accommodating and cooperating with each other, with the sole aim of building a STRONG Pakistan, under the slogan “Re-born Pakistan”.

In this regard, it is suggested that, we should AIM to bring Pakistan by the year 2035, to the level where Singapore was in the year 2015. All politics & other considerations should be made subservient to this TARGET for the year 2030; even if we have to abolish weekly holidays for the next 16 years & reduce our daily sleeping time to 6 hours.

Moreover, just like the Germans did for their re-building after the Second World War, EVERY Pakistani (residing within and outside Pakistan) must pay for the next five years,10% of its salary, business and other earnings, into the newly established “Pakistan rebuilding fund”.

All stake holders, particularly, from the deprived sections of the society in Pakistan, must immediately come forward, for deciding about the direction of the future of the nation.

Biggest factor in any victory is self-confidence. Anti-thesis of terrorism is education, coupled with economic emancipation.

As such, the nation must embark upon the following agenda, to resurrect our economy without any further loss of time.

1. Pakistan should make a solid case for convincing and requesting to all its foreign donors for a 5 years moratorium, on all debt repayments by Pakistan, which is a frontline state of the world’s war on terror (WOT). Here, don’t forget that the world powers have totally written off loans of many countries, for much lesser cooperation than Pakistan, which didn’t even demand a single penny from the NATO, for use of its airspace, since WOT started in Afghanistan.

2. 20% per annum reduction in all non-developmental government expenditures, plus total freeze in all perks paid from the national exchequer, involving foreign currency.

3. Maximum tax rate on each and every type of income in Pakistan should be fixed at 10%. This will not only bring huge revenues to the government, but will also discourage the tax evasion tendencies.

4. Increase in productivity & exports with liberal tax relief to industry, commerce & trade.

5. Set a target for 20% per annum increase in foreign remittances, by offering innovative incentives to expatriate Pakistanis.

6. Either ABOLISH, PRIVATISE or OUTSOURCE FBR (which will alone increase income by Rs.500 billion) or PRIVATISE or OUTSOURCE FBR & IMPOSE FLAT 10% tax (already being applied on dividend payments etc) on ALL & EVERY TYPE OF INCOME (as already mentioned at 3. above), without any exemption (except for the security forces personnel, whose salaries may be doubled with expected receipt of un-precedented increase in revenue, due to this formula). This will not only reduce income tax burden on salaried class (with max. tax rate of 10%, here don’t forget consultants are ONLY paying 6.5% tax) but will also result in so much increase in revenues, to the extent that government will not require any fresh tax imposition, in the budget. Plus, the government will be able to give tax free salaries to all the armed forces, rangers, police and other security agencies personnel, who are shedding their blood, in fighting the menace of terrorism, for our and our children’s safe TOMORROW.

7. Pakistan’s Foreign policy is excellent in theory, perhaps the best in the world. However, this policy should be implemented in its true letter and spirit with core emphasis on PEACE particularly with its neighbours; and FP thrust and theme should be that any and every action, must result in the economic benefit of the country.

8. Initiate steps (by imposing economic emergency) to bring each and every economic activity under document.

I am more than confident that by the dint of sheer hard work, sincerity & honesty, which is imbibed in the bones of the Pakistani work force, we can surely bring Pakistan, into the comity of 20 developed nations of the world, in the next 15-20 years.

9. The leaders of Pakistan holding the destiny of this great nation, with highest manpower potential and material resources in the world, must remember the following two adages.

– NOT FAILURE BUT SETTING LOW AIM IS A CRIME.
– IN ORDER TO ACHIEVE THE IMPOSSIBLE IT IS PRECISELY THE UNTHINKABLE WHICH MUST BE THOUGHT.

10. To motivate and instil confidence in the entire ordinary citizens of the country (which consists of an overwhelming chunk of the 200 million population of Pakistan), all necessary steps should be initiated to immediately eliminate, entire set of rules and regulations, favouring the VIP culture in the country.

11. Immediate and top most priority must be accorded (equal to the priority given to Zarb-e-Azb) to bring back Pakistani wealth (estimated to be above $500 billion) stashed in the banks of many foreign countries. In this regard, an amnesty and incentive scheme may be offered to all those Pakistanis, who want to bring their money from abroad voluntarily.

PAKISTAN PAINDABAD

My comments on the below mentioned news:

If I were the PM, would first replace the finance minister before giving the go ahead for any mini budget.

Unfortunately, this FM has neither the vision nor the will to act upon any out of box thinking.

He can only think the easy way of taking loans (on harsh conditions) and increasing the burden on general public (which pays the power and gas bills honestly) by increasing the utility charges one way or the other.

Our present government has also miserably failed in curbing the massive corruption in the country, which has the magnitude almost equal to the budgeted expenses of the year 14-15 i.e., Rs.4 trillion; which also means that the size of our black economy is equal to the white economy. And perhaps this size of corruption (Rs.12 billion/day according to the former Chairman NAB) may not be prevailing in any other country, where white and black economies are almost equal; and still the government is still looking the other way….but then the question arises why the government is silent over this massive corruption, tax evasion and utilities theft; which is eating away the very foundations of the country’s economy?

As such, the PMLN’s government which came into power on the promises of rooting out the corruption and bringing back the looted money, is giving an incentive to the dishonest and punishment to the honest citizens by increasing taxes and rates and not cracking down on the dishonest people.

News item of Express Tribune:

$6.7b IMF bailout: If needed, Pakistan may introduce mini-budget

By Shahbaz RanaPublished: July 8, 2014

Loan conditions: Rs1.4tr is IMF’s budget deficit target for Pakistan for 2014-15. PHOTO: FILE

ISLAMABAD:
In a bid to keep the $6.7 billion bailout programme afloat, Pakistan has assured the International Monetary Fund (IMF) that it will introduce a mini-budget and slow down development spending to create a cushion of Rs145 billion in case problems arise in delivering the budget deficit target.
“To help ensure programme targets can be met, the [Pakistani] authorities have identified several contingency measures that can be implemented if the expected fiscal adjustment begins to fall short of the objective,” an IMF report revealed on Monday.

The objective IMF mentions is keeping the budget deficit – the gap between income and expenses – equal to 4.8% of the country’s GDP or Rs1.398 trillion. This is lower by 0.1% of the GDP – or Rs32 billion – than the target approved by Parliament.
According to the written assurance, the government, on the revenue side, plans to eliminate statutory regulatory orders (SROs) in fiscal year 2015-16 if tax revenues fall below the level envisaged in the programme. For 2015-16, the government has already given an SRO-elimination plan that promises slating the orders equivalent to 0.3% of the GDP or Rs81 billion at the current size of the economy.
These Rs81 billion measures will be over and above the Rs231 billion net new taxes that the government imposed from July 1. For the new fiscal, the government has set a Rs2.81 trillion tax target that many, including the Federal Board of Revenue (FBR), privately admits is unachievable.

“The chances of a mini-budget are high as FBR cannot collect more than Rs2.6 to Rs2.65 trillion in this fiscal year … this is what I told the finance minister before the finalisation of the budget,” said Dr Ashfaque Hasan Khan, a renowned economist and member of the Economic Advisory Council.
“On the expenditure side, we will again reduce expenditure allocations in the first nine months of the year compared to the budget to create a reserve against any shortfall,” Finance Minister Ishaq Dar assured the IMF. This policy is consistent with a contingency plan that the government adopted in the previous financial year, which led to a severe under-spending on the development side.
Pakistan has assured that these measures could yield savings amounting to 0.5% of the GDP or Rs145 billion. “In any case, we stand ready to take compensatory measures as needed, including adjustment on the revenue side, to reach our fiscal target,” the finance minister told the IMF.
According to independent economists, such policies are anti-growth and will adversely affect the current fiscal year’s economic growth rate target of 5.1%. Apparently, the IMF doesn’t trust the government will achieve this target. “For FY2014-15, the economy is forecast to expand by around 4%,” the international lender noted in its report.
New surcharge
Pakistan has also assured the IMF that it will slap a new surcharge on electricity consumers to recover the circular debt if the National Electric Power Regulatory Authority (NEPRA) rejected its plan to recover circular debt from consumers by increasing tariffs. The report puts the total circular debt at Rs500 billion.
New conditions
The IMF has imposed four new conditions on Pakistan after the government showed reluctance in reforming some of the critical areas. These conditions, known as structural benchmarks, are steps to give real operational independence to the State Bank (SBP).
The second new condition is filling vacancies in the NEPRA board by end of current month. The third condition is offering minority shares in UBL and PPL to domestic and international investors, which has been met.
Published in The Express Tribune, July 8th, 2014.

Mian Muhammad Nawaz Sharif must read this editorial titled “IMF’s debt trap” published today, by the daily “The Frontier Post”.

However, I would have titled it “IMF’s economic DEATH trap”.

Moreover, Pakistan needs immediate appointment of a VISIONARY finance minister, who can take us out of the death trap of the ultra high foreign and local debts.

Pakistan call ill afford the running of its economy, just with loans and every now and then increasing tax and utility rates, ONLY for those honest citizens, who pay very timely, all the taxes and the utility bills. This is the most CALLOUS way of dealing with the economic woes of a country, that too by a DEMOCRATIC government.

The previous 5 years PPP rule and the last one years PMLN rule, has ruined the economic foundations of Pakistan; by running the finances of the country with huge domestic and foreign loans, without any considerations of the future repercussions, on the national economy and ultimately on the the sovereignty of the country.

Now, we have reached a stage where in the current fiscal year (2014-15), out of the total Budget of about 4 trillion PKR, we have kept an amount of 1.3 trillion PKR (about 1/3rd of the total budget of 4 trillion PKR) for the debt servicing ALONE, which is almost double the amount of our defence spendings, budgeted for the current fiscal year.

A R T I C L E

IMF’s debt trap

Posted on 2014-07-01 04:32:09

Dr. Murtaza Mughal, President of the Pakistan Economy Watch (PEW) has said that policy makers are focused on reducing deficit and privatization of prime assets as dictated by the IMF. By doing so they have pushed the country virtually in IMF’s trap. Transferring ownership of our national assets may result in growing poverty; in unemployment because of retrenchment by the new owners, and eroded exchange rates as foreign investors would transfer profits overseas. In addition, international financial institutions want to impose global economic order, a plan hidden behind attractive words like privatization, deregulation and downsizing etc.

Federal Finance Minister Ishaq Dar boasts about foreign investors’ confidence in the government, and claims to have commitment of $32 billion Chinese investment, which is in fact a loan; $11 billion loan has been approved by the World Bank, $6.64 billion by the IMF and $2 billion has been acquired through the launch of Eurobonds.

IMF touts that it helps recover the economies that are in dire straits, but in fact it has the record of multiplying the problems of debtor countries. Its conditions of withdrawing subsidies, devaluation of currency and privatization of prime national assets adversely impact the people and the state.

Pakistan is already in the grip of debt to the extent of $65 billion, and despite the rescheduling of the debt or taking new loans to pay back the old loans, one day these loans have to be paid. If this trend continues, Pakistan would find itself in the vicious circle; and would continue to take more loans to pay back the old loans; and also loans for mega projects like Dassu Project, which means phenomenal increase in debt servicing and as a result increase in fiscal deficit.

To avert the economic disaster, the government must show zero-tolerance to corruption, tax evasion, wastages and mismanagement in public sector enterprises. It should learn to live within its means and reduce the non-development expenditure by curtailing perks and privileges of cabinet members and parliamentarians.

If axe falls on development expenditure, Pakistan would not be able to build infrastructure for further development and industrialization to generate employment opportunities.

On their part, the trade and industry should resort to aggressive and innovative marketing policies; look for non-traditional markets; and try to increase the exports of value-added products to reduce the trade deficit.

Unfortunately, the IMF does not give suggestions or advices that really matter.

For example, there seems to be no pressure to immediately bring agriculture sector into the tax loop perhaps because majority of the parliamentarians belong to landed aristocracy.

Some industrialists have also gone into agricultural sector to take advantage of exemption on agricultural income, and use it to convert black money into white money.

It means that the IMF would not like to annoy the ruling elite. It has to be mentioned that agriculture contributes about 23 per cent to the GDP, but does not contribute to the exchequer in the form of taxes even to the extent of 5 per cent.

As regards trade deficit i.e. excess of imports over exports, our industrialists and exporters are handicapped because of higher input costs like electricity and gas charges.

It is better for the government to rely on homegrown policies instead of following IMF policies.

PML-N government has been claiming that it has competent, experienced and honest managers they why it does not put them as heads of the public sector enterprises to turn into profitable entities.

In many countries, the utilities are being run successfully by the state; why it cannot be done in Pakistan.

Shame on World Bank.

Human Rights Watch, Amnesty International, USA and the UN Security Council must stop WB which plans to invest $2 billion in Myanmar where worlds worst genocide of Muslims is continuously taking place for the last about 2 years.

We must remember that a recent UN report has stated that “Muslims in Myanmar are the worlds most persecuted minority.”

Power to People: World Bank Group to invest US $2 billion in Myanmar to support reforms, reduce poverty, increase energy and health access

January 26, 2014

Yangon, January 26, 2014 – On his first visit to Myanmar, World Bank’s President Jim Yong Kim today announced World Bank Group plans for a US$2 billion multi-year development program. It will include projects that dramatically improve access to energy and health care for poor people and support other key government development priorities.

He announced the major increase in new financial support at a community health clinic in Yangon where he was joined by the Myanmar Minister of Health, Dr. Pe Thet Khin. They met doctors, local residents, and members of the international donor community and Kim pledged the funding will help improve the lives of the poorest people and support ongoing reforms in Myanmar.

“We are increasing our support for the huge reform effort underway in Myanmar because we want to help the government bring benefits to poor people even more quickly,” said President Kim. “Our US$2 billion dollar multi-year program will support the government’s plans to deliver universal health care to citizens and to help everyone in the country gain access to electricity by 2030.”

The World Bank Group will harness expertise and resources from IDA, IFC and MIGA to support the government’s multi-year investment program. This will include US$1 billion in Bank Group financial support to expand electricity generation, transmission and distribution. Over 70 percent of Myanmar’s people do not have access to reliable electricity.

The energy investment will also support development of a National Electrification Plan, enhance institutional capacity, and promote regulatory reforms that are critical for sustainable private sector participation. It will include support for private sector investments in power generation and distribution, as well as the scale-up of renewable energy for rural and off-grid electrification.

“Expanding access to electricity in a country like Myanmar can help transform a society – children will be able to study at night, shops will stay open, and health clinics will have lights and energy to power life-saving technology. Electricity helps brings an end to poverty,” said Kim.

IFC is partnering with the Government of Myanmar to increase efficiency in the electricity distribution sector and extend service to a greater number of end users. The World Bank Group will also pursue investments to support transparent, cost-effective private investments, and public-private joint ventures for large new power stations.

Kim said the investment will include US$200 million in IDA funding to help Myanmar achieve universal health coverage by 2030. Together with financing previously committed by other international development partners, the IDA financing will help Myanmar scale up access to quality, essential health services for women and children through results-based financing, and remove out-of-pocket payments as a barrier to health care for the poorest people.

“Everyone should have access to affordable, quality health services, and no one should be forced into poverty trying to pay for the health care they need,” he said. “The Myanmar government’s ambitious plan for universal coverage by 2030 will help ensure that every Myanmar citizen has the opportunity to live a healthy, productive life.”

An estimated 75 percent of Myanmar’s mostly rural population lacks access to quality health care, and high costs place most essential services out of reach for many Myanmar families who live below the poverty line.

President Kim will attend the Second Annual Myanmar Development Forum, on Monday, January 27th, in Nay Pyi Taw where he will meet with President Thein Sein, members of the government and opposition and business leaders.

Additional Information:

· The World Bank Group’s commitment to supporting health care in Myanmar is part of a global effort to achieve universal health coverage with two global targets for universal coverage by 2030. The financial protection target is that no one will be forced into poverty due to out-of-pocket expenses for health care. The service delivery target is to double the proportion of the poorest people with access to essential health services, including maternal and child health services, communicable diseases, treatment for chronic conditions such as high blood pressure and diabetes, mental health and injuries, from 40 percent to at least 80 percent coverage.

· Increasing efficiency and capacity of existing power generation is the fastest way to improve electricity supply in a sustainable manner. The first investment credit after Bank re-engagement in Myanmar financed a $140 million electric power project to double the capacity and efficiency of gas-fired power plant in Mon State.

· Development of the country’s National Electrification Plan is also being supported by the World Bank under the Sustainable Energy for All (SE4ALL) initiative, a jointly chaired World Bank-United Nations effort that aims to achieve universal access to electricity by 2030.

An Excellent Out of Box Solution for the Entire Economic Malaise of Pakistan.

Pakistan must give a try to this novel idea to easily eliminate poverty and unemployment.

The other untapped ‘free’ money

July 17, 2013 Najma Sadeque

An Article About a Novel Idea to Easily Eliminate Poverty & Unemployment Published in the daily “The Nation” dated 17 July, 2013.

The actual worth of goods and services in the world last year was over $71 trillion, a staggering jump from over $41 trillion in 2000. If that’s the case, how is it that the amount of money in the world – coins, paper and digital – is ten times that or more? With such excess, why are 2 billion still hungry, poor, jobless or underemployed?

What happens when some have too much and most have too little money? When a minority of people have several hundred or thousand-fold more than others, they buy up most of everything, create monopolies and cartels, arbitrarily raise prices and make undue, excessive profits while the majority do with less than their fair share, or go without entirely. They have money enough to lobby and influence politics, government and legislation, and unwarranted control over or privatisation of ‘commons’ lands and public goods, leading to loss of social and economic services for the masses. Why is such excess purchasing power allowed when it causes heightened and unacceptable inequalities and damaging inflation?

If we really believe in things like human and constitutional rights, democracy, Islamic finance, and equal rights and opportunities, and acknowledge that all natural resources are essential for survival, and all are therefore entitled to an adequate share each, there then has to be a mechanism to ensure fair distribution of minimum needs for all citizens.

That facilitator is money, which today no longer has to be backed by gold or silver or other commodity; it just needs to be guaranteed and reliable.

Various types of positive financial services have successfully served the “little people” in many other countries for at least a century. When dire economic straits occurred, such as in Argentina, Iran, even USA and UK, and most recently in Greece, apart from rioting and protests, did people just curl up and die because they had no cash? No, necessity being the mother of invention, some innovated or revived old, tested solutions known as complementary or community currencies.

It is best illustrated by one of the most famous success stories. In 1932, Wörgl, a small Austrian town, was in dire straits. There were 1,500 jobless and 200 impoverished, penniless families. But Michael Unterguggenberger, Wörgl’s brilliant Mayor, decided to test out the ideas of Silvio Gesell, a German economist and activist. He issued scrip (free of cost except for printing) with an exchange value of 40,000 schillings, and spent the money into circulation through public works that created huge employment. All the broken roads were repaved, the water system rebuilt, a ski jump, new houses, and more made; even a bridge, commemorated with a permanent plaque that proudly states: “This bridge was built with our own ‘free’ money.”

As it turned out, every scrip generated 12 to 14 times more employment than the official schillings in circulation. It was so successful that a neighbouring city and six villages copied it. The then Prime Minister of France specially visited to see the “Miracle of Wörgl” for himself. A year later, 200 other Austrian towns planned to replicate it.

At this point, the Central Bank grew alarmed and asserted its monopoly over the finance system, even though each scrip was restricted to community use. The people sued the central bank, but lost. It was an unfortunate dog-in-the-manger attitude, refusing to assist people who needed help, but also thwarting the people from helping themselves.

Since then, there have been many other such examples – but with happier endings, some with government tolerance if not backing. A virtually costless solution for people denied the right to paid work and money.

Today, there are over 2,500 complementary and community currencies around the world. There are small service charges, but no crippling interest. There have always been poor and low-income or the temporarily cash-strapped; alternatives were developed according to local needs.

The tokens are not national legal tender, and not allowed outside delineated areas of operation. Yet, they are being resorted to increasingly, to overcome the marginalisation of the masses by banks or inept governments.

In recent decades, answering a need, they have grown in popularity and use. Just a few weeks ago, the 2nd International Conference on Complementary and Community Currency Systems took place in the Netherlands, addressed by academics, economists, public bankers and activists. Other such meetings are forthcoming this year in UK and USA. Since 2002 – long before the global financial crash – some local currency schemes in Europe under certain conditions are exchangeable with national currency.

Some schemes are for the express purpose of local food production and re-localisation of purchasing. If and when they are no longer needed, they can be easily phased out. It is the sort of thing our women and our peasants need until they are “mainstreamed” into the wider economy.

In a country such as ours where there is inadequate infrastructure for most services, this would ideally be carried out by trusted civil service organisations as they have been elsewhere. Micro-credit philanthropies need to study complementary/community currency possibilities because the money they use still carries an in-built interest burden, while microcredit banks charge heavy interest like any other bank; they serve individuals rather than communities, and only to a limited extent.

Commercial banks are limited by their own for-profit-only existence, lending only to those who pay back with interest; and certain self-serving transactional practices that have corrupted part of the wider banking world, in the end failing most people, especially of the developing world.

The scheme requires no major infrastructure, and it certainly does not require foreign loans, that would be undesirable and defeat the purpose. There is one proviso though. It has to be operated with transparency and honesty. Success stories came from maintaining open, audited books and public participation. If corruption or political advantage intrude, it will collapse before take-off.

The question is: why didn’t Pakistan adopt such solutions earlier? Mainly because our politicians and decision-makers couldn’t care less; nor do they want to empower people, who may become the competition or reduce their domination – as in the case of land reform. The “highly-qualified” are so inward-looking, even brainwashed by World Bank/IMF norms, they don’t even look at today’s easily accessible global information, to learn from outside.

It first needs the realisation that money is merely a measure – a medium of exchange and accounting device – and that it does ‘not’ have to be borrowed or be earned first before it can be spent. Nor is it a special knowledge that only bankers and controlling governments can understand.

The writer is a former journalist and currently director of The Green Economic Initiative at Shirkat Gah, a rights and advocacy group.

By Nadeem M Qureshi

In 2008 when the PPP government of President Asif Zardari took office Pakistan’s total foreign debt was about $40 billion. Today, at the end of the PPP government’s term, it is $60 billion. Twenty billion dollars of new debt has been added. As the Government of Nawaz Sharif begins negotiations with the IMF to seek more loans, the people of Pakistan need to ask two basic questions. The first is: What happened to this money?

By almost any economic indicator people are worse off today than they were five years ago. Unemployment and inflation are higher. Vital infrastructure – railways, roads, public transport, hospitals, schools, water supply and sewage systems – have deteriorated to unprecedented and unacceptable levels. It is almost as though the $20 billion has vanished into thin air.

Well, some of it has. Consider, for example, the single case of the purchase of Boeing 777 aircraft by Pakistan International Airlines in 2011. Transparency International Pakistan maintains that of the $1.5 billion paid for the aircraft, $500 million were diverted as kickbacks to the government functionaries. Multiply this by dozens of multibillion dollar deals over five years, across different economic sectors, and it is clear that many of the billions taken in the name of the people of Pakistan have disappeared into private bank accounts.
Not all of the $20 billion is unaccounted for. Some of it is on rude display in the fleets of bullet proof luxury vehicles of politicians and bureaucrats. Less visible is the money spent on acquiring and maintaining the fleet of private jets at the disposal of the country’s ‘leaders’ and their acolytes. Also hidden from view but widely reported are the luxurious lifestyles of the people’s ‘servants’. A distasteful example of this was the news that the government planned to spend Rs. 260 million to renovate the President’s kitchen.

The second question that the people of Pakistan are entitled to ask is this: Should they be liable to pay back money taken in their name but used almost exclusively to enrich the ruling coterie? It is clear that the highly paid international bureaucrats who work for the IMF are not stupid. It cannot have escaped them that the money they are doling out is misused, or worse, stolen. Why then should the people of Pakistan pay for their willful negligence? This raises issues of legality and precedent. Is it lawful for a country to refute debt taken on by corrupt politicians? And, are there any precedents for this? The answer to both questions is yes.

The concept of odious debt was established in international law by Alexander Nahum Sack, a Russian born jurisprudence expert, in a paper published in Paris in 1927. Odious debt “is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state.”

The doctrine further suggests that since odious debt is deemed the personal debt of the rulers in power at the time the debt was secured, recovery should be from their personal assets. There are also several precedents in which countries have repudiated national debt. The United States set the first precedent of odious debt when it seized control of Cuba from Spain. Spain insisted that Cuba repay the loans made to them by Spain. The U.S. repudiated that debt, arguing that the debt was imposed on Cuba by force of arms and served Spain’s interest rather than Cuba’s, and that the debt therefore ought not be repaid.
The debt was annulled. In recent times, there is the example of Haiti. When the dictator Jean Claude Duvalier was overthrown in 1986, 66 US senators supported a resolution calling for cancellation of Haiti’s debt on the grounds that the money was misused. In the end, half of Haiti’s debt was written off.

By far the most effective use of the ‘odious debt’ doctrine in recent times is by President Rafael Correa of Ecuador. In 2008 he repudiated Ecuador’s national debt of $ 3 billion and announced the country would default and fight creditors in international courts. He succeeded eventually in getting a 60% write off on Ecuador’s debt.

Sadly, it is doubtful that Pakistan’s current leaders will be able to take the IMF bull by its horns. They lack the competence, integrity and, yes the intelligence, to do so. What a tragedy for the poor people of Pakistan who will continue to pay for their leaders’ larceny.

(The writer is Chairman of Mustaqbil Pakistan)

Moreover, Mr. Naeem Sadiq wrote on 12, July 2013 in the daily “The News” quoted as below.
Quote.”Dear Bank
Naeem Sadiq
TheNews
Friday, July 12, 2013
Many thanks for the $5.3 billion loan. One small step for a bank, a giant leap for a chronic borrower. I can proudly claim that my debt, steadily rising every year, has now reached $66.17 billion. This would mean that every member of my family must cough out $366 to repay this loan. This can only happen if we all stop eating, drinking – in fact living – for the next 10 months. Is that what they also call collective suicide? I made sure not to consult my unenthusiastic family, on whose behalf these loans were taken. They never seem to agree with my lifesaving – or should I say death-delaying? – initiatives. You too must be equally ecstatic. After all you end up gaining the most. You will retain most of this amount as repayment of the earlier loan, while my unflinching yearly debt-servicing will keep you charmed for a long time to come.

You had raised a number of questions before you approved the loans. Why is it that despite such massive borrowing, my family shows no signs of getting any better? Why are 50 percent of the family members illiterate and 60 percent below poverty level? Why are half the children out of school? Why is there no electricity half the time? Why does no one in the family have access to clean tap water?

You also wanted to know the reasons for the striking disparity in the lifestyle of some other members of our family. They move about with armed guards in obscenely large vehicles (often smuggled), live in luxury homes, have properties and cash stacked in foreign lands and drink corporate soda or water only from those neat-looking plastic bottles. It is only this segment of the family that is forever pushing for more loans. They are the ones who justify the bank’s slogan of ‘poverty alleviation’ – since this is the only group whose poverty gets truly alleviated.

My sixth sense tells me that you already know the answers to all these questions. You were merely going through the motions, filling forms, giving an impression of officious formality and appropriateness. The fact that I earn little, waste a lot and pilfer the most, makes me an ideal customer for the sort of business you are in. I have learnt to plead my case by closely studying beggars who flock the streets of Karachi during the holy month of Ramazan every year. I use exactly the same techniques with only three minor variations – dress, language and location.

Now, some bad news for you. My entire family, except those very few who gained the most from your loans, got together last night to say that they would no longer tolerate being pushed into this bottomless cesspool.

When I gave them your message that they needed to tighten their belts, they said they were too poor and did not have any belts to tighten. They said they were fed up of the loans taken on their name – the loans that make the elite of the family get richer and have still more fun. The mounting loans have made them poorer than before and taken away the last shreds of dignity that covered their half-naked bodies. Getting crumbs like 0.8 percent for health and 1.8 percent for education made them still more unhealthy, and yet more uneducated.

In simple words, my family has decided not just to stop seeking any further loans but to also stop any further debt-servicing. An unemployed maths teacher in my family spent some time to calculate that we paid $37.2 billion as debt-servicing alone in the last eight years. This is many times more than the principal amount that we borrowed during this period.

We are absolutely sure that there is no law that can force us to close our schools, starve our children, privatise our resources and abandon our welfare, simply because our selfish elders borrowed huge sums on behalf of those who cannot even spell the word ‘loan’ or have ever seen a bank from the inside.

Having paid off the principal amount several times over, we have a good reason to ask for total debt cancellation and an immediate freeze on any further debt-servicing. Do you realise that discovering a new mode of dying – by getting trampled while struggling to receive free food donations – speaks volumes about the poverty that your loans have been able to alleviate?

Sincerely,

Issac.dare@gmail.com
naeem sadiq
twitter : @saynotoweapons ” Unquote.

Attention Mr. Ishaq Dar, the IMF and the World Bank.

we paid $37.2 billion as debt-servicing alone in the last eight years. This is many times more than the principal amount that we borrowed during this period.

An Eye Opener by Mr. Naeem Sadiq

Dear Bank

Naeem Sadiq
TheNews
Friday, July 12, 2013

Many thanks for the $5.3 billion loan. One small step for a bank, a giant leap for a chronic borrower. I can proudly claim that my debt, steadily rising every year, has now reached $66.17 billion. This would mean that every member of my family must cough out $366 to repay this loan. This can only happen if we all stop eating, drinking – in fact living – for the next 10 months. Is that what they also call collective suicide? I made sure not to consult my unenthusiastic family, on whose behalf these loans were taken. They never seem to agree with my lifesaving – or should I say death-delaying? – initiatives. You too must be equally ecstatic. After all you end up gaining the most. You will retain most of this amount as repayment of the earlier loan, while my unflinching yearly debt-servicing will keep you charmed for a long time to come.

You had raised a number of questions before you approved the loans. Why is it that despite such massive borrowing, my family shows no signs of getting any better? Why are 50 percent of the family members illiterate and 60 percent below poverty level? Why are half the children out of school? Why is there no electricity half the time? Why does no one in the family have access to clean tap water?

You also wanted to know the reasons for the striking disparity in the lifestyle of some other members of our family. They move about with armed guards in obscenely large vehicles (often smuggled), live in luxury homes, have properties and cash stacked in foreign lands and drink corporate soda or water only from those neat-looking plastic bottles. It is only this segment of the family that is forever pushing for more loans. They are the ones who justify the bank’s slogan of ‘poverty alleviation’ – since this is the only group whose poverty gets truly alleviated.

My sixth sense tells me that you already know the answers to all these questions. You were merely going through the motions, filling forms, giving an impression of officious formality and appropriateness. The fact that I earn little, waste a lot and pilfer the most, makes me an ideal customer for the sort of business you are in. I have learnt to plead my case by closely studying beggars who flock the streets of Karachi during the holy month of Ramazan every year. I use exactly the same techniques with only three minor variations – dress, language and location.

Now, some bad news for you. My entire family, except those very few who gained the most from your loans, got together last night to say that they would no longer tolerate being pushed into this bottomless cesspool.

When I gave them your message that they needed to tighten their belts, they said they were too poor and did not have any belts to tighten. They said they were fed up of the loans taken on their name – the loans that make the elite of the family get richer and have still more fun. The mounting loans have made them poorer than before and taken away the last shreds of dignity that covered their half-naked bodies. Getting crumbs like 0.8 percent for health and 1.8 percent for education made them still more unhealthy, and yet more uneducated.

In simple words, my family has decided not just to stop seeking any further loans but to also stop any further debt-servicing. An unemployed maths teacher in my family spent some time to calculate that we paid $37.2 billion as debt-servicing alone in the last eight years. This is many times more than the principal amount that we borrowed during this period.

We are absolutely sure that there is no law that can force us to close our schools, starve our children, privatise our resources and abandon our welfare, simply because our selfish elders borrowed huge sums on behalf of those who cannot even spell the word ‘loan’ or have ever seen a bank from the inside.

Having paid off the principal amount several times over, we have a good reason to ask for total debt cancellation and an immediate freeze on any further debt-servicing. Do you realise that discovering a new mode of dying – by getting trampled while struggling to receive free food donations – speaks volumes about the poverty that your loans have been able to alleviate?

Sincerely,

Issac.dare@gmail.com

naeem sadiq
twitter : @saynotoweapons
———————————————————————
How the state promotes crime and militancy. Look at the yearly average for prohibited bore licenses (PB) and non prohibited bore licenses (NPB) issued in last 10 years to the rich and powerful, to friends and relatives and to party men and criminals.

Yearly average of PB licenses, from 2003 to 2007………361
Yearly average of PB licenses, from 2008 to 2012 ………13895

Yearly average of NPB licenses, from 2003 to 2007………15261
Yearly average of NPB licenses, from 2008 to 2012 ………240494

Ref: official info obtained by using FOI and SC Suo moto case 16/2011

Dear Mr. Ishaq Dar,

Your kind attention is invited towards the following news item titled “IMF extends zero interest rates on poorer country loans” published by the daily “Pakistan Today” on 23 December, 2012 detailed news available at the link :- http://www.pakistantoday.com.pk/2012/12/23/news/profit/imf-extends-zero-interest-rates-on-poorer-country-loans-2/

In this regard, as per my many earlier submissions to the PM and the entire nation, I am fully convinced, without an iota of doubt that it is sheer disaster recipe for the Pakistan’s economy, to seek loan (that too on an exorbitantly high rate of 3%) from IMF, to repay their old loan. Moreover, your argument that this was the only option to avoid a default, also do not hold water, as firstly, I have explained not one but many viable options in my earlier communications and secondly, default is better than the destruction of the very foundations of the nation’s economy. Hope you know very well that in the recent past, many countries have bravely negotiated with the international lending agencies and succeeded in getting reduction of up to 60% of their loans.

However, in Pakistan’s case our loan amount is increasing with an unbelievable speed. It was recently reported that when PPP government took over in 2008, our debt liability was $40 billions and now it has increased to much more than $60 billion.

The nations fails to understand that why you remained silent as PMLN’s financial expert and also as a senator, during the PPP tenure, when it crossed the LEGAL and constitutional limit of 6% debt to GDP ratio. This was such a grave violation of the law that had PMLN taken up this issue with the Supreme Court, the PPP government would have been immediately dismissed.

So how can you now absolve yourself from this financial mess, by just saying that you took over the government with nation’s economy in very bad shape?

Also, how can the history exonerate the PMLN in general and Mr. Ishaq Dar in particular, for not playing a pro Pakistan role when the PPP government was playing havoc, with the country’s economy?

As such, Mr. Ishaq Dar, there is only one way of atonement of our past acts of commissions and omissions, by not to further burden the nation’s economy with extremely and unprecedentedly expensive loans of IMF, lest the future generations may not have to say that “لمحوں نے خطا کی تھی صد یوں نے سزا پائ”

Kindly still there is time to explore other options to avoid IMF loan. Nothing is impossible. Where there is a will there is a way.

With best regards,

Syed Nayyar Uddin Ahmad
0321-9402157
Lahore.

Sent from my iPad3 4G LTE

Abu Dhabi pledges $50bn investment in India.

I exactly referred to the above mentioned opportunity, as option No.2, in my article titled

Mr PM! There are three options to avoid IMF loan
published by the daily “The News” on page 4 dated 27 June, 2013 (link:- http://images.thenews.com.pk/27-06-2013/ethenews/t-23752.htm )

quoted as below.

Quote. “2. Recently Abu Dhabi helped Dubai in its financial crisis by providing 10 billion dollars. We can also approach our friends to help us on the same terms.” Unquote.

Somehow, our government and the bureaucracy is very fond of IMF and the World Bank for the reasons not secret anymore.

Hope Pakistani rulers are not sleeping over the opportunity of our friend’s investment in Pakistan before they exhaust all their funds elsewhere.

We must inform the world that Pakistan is the ONLY country in the world where foreign investors can take back 100 % profit and capital whenever they wish so. Pakistan is also the only country in the world where there is Zero income tax on Independent Power Plants (IPP’s).

One very important thing to be noted is that the strategic interest of our friends will also align with India after their financial stakes are deposited in Indian lockers.

As a law, political, diplomatic and military support follows the financial interest. As such, government must act immediately before its too late for Pakistan.

Wake up Pakistan before its too late.

A news reported on 4 July, 2013 by the daily “The News”.

NEW DELHI: Abu Dhabi has promised to invest $50 billion in India’s cash-hungry infrastructure at a time when growth in Asia’s third-largest economy has sharply slowed, a newspaper reported Wednesday.
The pledge by Abu Dhabi was the key factor in pushing New Delhi to approve a bilateral deal to increase flights between the two countries, an Indian official told the Indian Express.
“A commitment to invest $50 billion in the infrastructure sector of the country by Abu Dhabi was a key reason for us to agree to the increase,” a senior government official, who declined to be named, said.
News of the investment comes just months after the International Monetary Fund criticised India for not improving its creaky infrastructure during the period it experienced growth rates close to double figures.
The IMF said in February that India would likely see slower growth than expected in 2012/13 at 5.4 percent and pay the price for failing to ensure investment in infrastructure kept pace with economic growth in the previous decade.
The plan to increase flights between the UAE and India is linked to a controversial proposal by the Abu Dhabi-based Etihad airline to purchase a 24 percent stake in India’s Jet Airways for 20.5 billion rupees ($342 million).
That deal, the largest foreign investment proposal in India’s aviation sector, faces regulatory hurdles, with many ministries raising objections over the bilateral increase in flights as well as over control of Jet after the sale.