Economic situation worries Musharraf

By B. Muralidhar Reddy

ISLAMABAD, OCT. 31. It cannot get any more ironical. Pakistan is faced with a piquant situation on the economic front in the post- September 11 scenario.

The foreign exchange reserves have crossed a record $ 3.5 billions even as exports this month alone dipped by over 30 per cent. Islamabad estimates a total loss of $ 1.5 billions of exports on account of the war in the neighbourhood.

The forex reserves have swelled essentially because of the sudden surge in economic assistance and loans from the western block as a `reward' for the decision of the Musharraf Government to side with the U.S. in its fight against the Taliban and the Saudi fugitive, Osama bin Laden.

Notwithstanding all the goodies flowing from the West and the international financial institutions, the Pakistani President, Gen. Musharraf, is seriously concerned about the impact of the Afghan war on the country's economy. He convened a high-level meeting recently to take stock of the state of the economy. The Finance Minister, Mr. Shaukat Aziz, who has been in the thick of all economy-related action, gave a detailed briefing to Gen. Musharraf.

Such has been the impact of the sudden inflow of millions of dollars from various quarters that the value of the Pakistani rupee has registered a sharp increase. Before September 11, one could buy 67.50 Pakistani rupees for one dollar in the open market. Today, one dollar fetches no more than 61 Pakistani rupees.

Millions of dollars worth of export orders have either been cancelled or postponed partly due to increase in the rupee value and partly due to the war in Afghanistan. The insurance companies have jacked up their premiums seriously affecting the shipping industry. The civil aviation industry is in the doldrums.

To redress the problems of exporters, the Finance Minister announced at the meeting that a refund of Rs. 12 billion would be made within next two months to improve liquidity in the market. Also the quarterly reduction of duty drawback was deferred.

Mr. Aziz announced that he was visiting Tokyo to explain to the Japanese Government the debt strategy, carved out by Pakistan, and seek its support for a sustainable solution of the debt problem. Pakistan, which owes about $ 5 billions to Japan, has been urging Tokyo to consider a write-off of the debt.

The IMF would meet on December 5 to consider a Poverty Reduction Growth Facility(PRGF) for Pakistan. The Paris Club would be meeting on December 11. The Commerce Minister, Mr. Dawood Abdul Razak, who was also present at the meeting, said talks were going on with insurance companies and underwriters in U.K.

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Section  : International
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