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Pre-budget - seminars.

The pre-budget seminars organised by Ministry of Information and Broadcasting were successfully held at Islamabad, Peshawar, Lahore, Quetta and Karachi. The participants insisted that Agricultural Income Tax must be levied, wasteful expenditure should be drastically cut and indirect taxes should be avoided. The keynote speeches were delivered as rituals and contained a kind of warning that the masses should be prepared for heavy dose of taxation.

The pre-budget seminars held in different cities of Pakistan came to an end on May 17, 1990 at Karachi. In all, there were five seminars held at Islamabad, Peshawar, Lahore, Quetta and Karachi. The first session was addressed by Mr. AGN Kazi, Deputy Chairman Planning Commission and he discussed the Macro Economic Framework and estimated a growth rate of 5.2 per cent in the current fiscal year against a growth rate of 4.8 per cent in the preceding year. He projected a growth rate of 5.5 per cent for the year 1990-91.

Mr. Kazi attributed the improvement in the growth rate mainly to substantial increases in the manufacturing sector from a lowly 4 per cent last year to 7.9 per cent during the current year and he expected this trend to continue next year projecting a growth rate of 7.7 per cent in the manufacturing sector. This remarkable increase in the growth rate in the manufacturing sector more than made up the shortfall suffered by the agricultural sector which grew at the rate of 4.8 per cent this year compared to 7.1 per cent last year.

Mr. Kazi said that despite the law and order situation and extended rounds of curfews in Karachi, the factory owners appeared to have made some kind of arrangements to keep the wheels of their industries running. Mr. Kazi, particularly took pride in the fact that the rate of investment which during the current year had surpassed the target of 17.6 per cent of GDP to 18.1 per cent against an achievement of 17.6 per cent last year. He projected the investment to grow at the rate of 18.9 per cent next year.

In this connection, he drew the attention to the fact that during the year national savings jumped to 14.1 per cent against 12.7 per cent achieved last year and projected it to grow at the rate of 15.9 per cent next year. Simultaneously with the increase in national savings, net foreign savings declined from 4.8 per cent of GNP last year to 3.9 per cent during the current year and it is projected to grow by only three per cent next year.

Mr. Kazi, thought it to be a remarkable achievement and said if the trend continued, the country could gradually decrease its dependence on foreign capital which in turn would help reduce the balance of payments gap and curtail the need for borrowing by that extent.


The growth rate in agriculture sector was likely to be around four per cent. The wheat production, Kazi said would be around 15 millions tons this year against of last year. The next year target for wheat production, Kazi said, was 15.8 million tons. The target for sugarcane, Kazi said, was 38 million tons for the next year against the expected sugarcane production of 36.1 million tons. The cotton production is estimated to be around 8.6 million bales during the current fiscal year while the target for the 1990-91 is nine million bales. The rice production was stagnant. However, the strange shift from Irri to basmati rice production, Kazi said, improved in value-added term but the quantity was the same.

Exports Imports

Exports during the year grew at the rate of 7 per cent (4.9 billion dollars) compared to last year's (4.5 billion dollars) while imports grew at the rate of 3.6 per cent (7.3 billion dollars) compared to last year's (7.2 billion dollars). Next year Kazi expected exports to increase by a hefty 13.3 per cent (5.6 billion dollars) and imports by 3.2 per cent (7.5 billion dollars).

The trade deficit is likely to be slashed from $2.4 billion in 1989-90 to $1.9 billion in 1990-91. He projected the remittances to bring in as much as 1.8 billion dollars next year against an income of 1.9 billion dollars this year which was substantially more than the 1.8 billion dollars achieved last year.

Mr. Kazi believed that the country would have foreign exchange reserves equivalent to 5.5 weeks import bill at (775 million dollars) at the end of current year against foreign exchange worth import bill for 3.3 weeks import bill for recorded last year (453 million dollars). Next year, he expects foreign exchange reserves to go up to 1.1 billion dollars equivalent to import bill for 7.6 week imports.


Mr. Kazi said the rate of inflation in the country was estimated at 11.2 per cent in January, February 1989 which came down to 5.1 per cent in November 1989. However, due to recent price increases it went up to 6.1 per cent in March 1990 and now I hope it would be around 7 or 8 per cent by the end of this fiscal year.

He attributed this slow down in the rate of inflation despite price increased of a number of items and utilities during the year, to the tight monetary policies of the government. "In 1987-88, money grew at the rate of 13.7 per cent against the target of 12.2 per cent but next year it would be brought down drastically to 4.5 per cent, explained Mr. Kazi.

He said during the current year against a target of 10.7 per cent so far the money had grown at a rate of 9 per cent "that is well within the target" ' he added. Discussing government's credit policy he said the target for credit expansion was fixed at 6.7 per cent and so far an expansion 5.5 per cent had been achieved. When asked if there was any relationship between the monetary policy of the government and the rate of unemployment in the country, Mr. Kazi said: "There is a cost for everything"' and agreed at that there was a relationship between monetary policy and generation of jobs.

Answering another related question, he said if the manufacturing sector expanded by over seven per cent, it implied that new jobs were being generated but "probably because there is a trend towards more contractual labour, which are not recoreded on official books, there appears to be no perceptible movement on this front", he added. He said expansion of service sector also meant more job generation.

Mr. A.G.N. Kazi painted a rosy picture of the economy However, he admitted that government had failed to make good its promise to spend 4.5 per cent of the budget on education and that defence was soaking up 7 per cent of the GNP while India spends only 3 per cent of the GNP on defence. The performance of private sector was beyond expectation this year ass the actual estimated investment made during the current year is Rs. 73.4 billion. The target fixed for next year is Rs. 88.5 billion for investment in private sector.

Seminar at Peshawar

Public Finance & Budget

The Second or a series of the seminars at Peshawar was addressed by Mr. V.A. Jaffery Prime Minister's adviser on Finance and Economic Affairs. He said that by making boastful claims of "no taxes" in their coming budgets, the provincial governments are trying to cash in politically and the contradiction in their policies becomes glaringly obvious when they demand a large share from the federation.

Mr. Jaffery observed that over the last five years current expenditures of the provincial government grew at double the rate of increase in revenue receipts making them rely even more heavily on the divisible pool of the Federal taxes and nonobligatory grants. While impressing upon the participants of the seminar that the imposition of agricultural tax fell under the ambit of provincial governments, the Minister's Adviser said: "they do not want to collect taxes but desire a greater share of what we collect."

Mr. Jaffery, who seemed extremely annoyed at the Balochistan Chief Minister's recent statement in which he had announced that his government planned to Minister's Adviser said: "they do not want to collect taxes but desire a greater share of what we collect."

Mr. Jaffery, who seemed extremely annoyed at the Balochistan Chief Minister's recent statement in which he had announced that his government planned to levy no new taxes, said the prices of land had shot up by 40 to 50 per cent over recent years and the provincial governments could have availed this opportunity of increasing their revenue collection. He said that massive landholdings by the smugglers and blackmarketeers should be taxed and added that this taxation had to be done by the provincial governments.

"We are poor nation and are faced with extremely adverse conditions," Mr. Jaffery observed. While describing government borrowing as inevitable for sustaining economic development, he said our borrowing amounted to as high as seven to eight per cent of the total budget size which was overburdening the balance f payment situation. He said the foreign creditors too had their limitations, that Pakistan's credit position had reached a stage where any further deterioration of the economy could lead the country to total disaster. "If we allow ourselves to go on borrowing recklessly, we will be faced with an even higher fiscal deficit and an inflation rate leaping beyond controllable limits.," he maintained.

Highly charged with emotion and seemingly grim over the state of the Pakistan economy, Mr. Jaffery said the fiscal deficit was the biggest source of inflation. He said a high fiscal deficit was what the people needed to fear rather than taxes, which did not fuel inflation to that high a level. Arresting inflation he said, was the prime target of the Federal Government. He held that the ways an means of reducing the deficit demanded complex and painful measures, which, if not taken now, would confront us in six months with the debt situation the Latin American states faced today. He also regarded the high interest rates at domestic borrowing which are double the international creditors' average interest rate of five per cent, as a basic organ behind the high rate of inflation. In what seemed to be Mr. Jaffery's justification and warning for drastic steps in the forthcoming budget, he said the country was confronting a serious threat as its eastern borders and the people should be ready to face any eventuality." "We need to take proportional measures to maintain a balance in defence against India, which has an economy much larger than ours," he commented.

With development, defence and debt-servicing consuming 78 per cent of the total budget, he said, "we have only 22 per cent of the budget to play around with". Citing the government's further limitations, he observed that with scarce resources at our disposal "we have a lot to do in the spheres of education and health." The government, he said, was fully aware of massive overstaffing in government departments, but there was very little it could do about it. There were great political risks involved in sacking the extra staff and this would also aggravate the already acute unemployment problem. Mr. Jaffery believed there were contradictions in the public's demands. "On one hand they demand a separate. ministry for textiles, which means expanding the public sector, and on the other they criticise the public sector in a ruthless manner."

Talking about the revenue side of the budget, he said if tax figures were anything to go by, the balance between growth and income was highly disproportionate with only a million people on the government tax rolls. He considered tax evasion a moral and social crime and conceded that the tax system was overloaded by exemptions. However, he told the audience that the government would make sure that no exemptions were awarded unduly. He reiterated his views about the proposed General Sales Tax and said that the tax would be imposed at the manufacturing stage only. The government wanted to have documentation and the tax would restrain the overgrowing consumption in the country.

While answering the queries of participants. Mr. Jaffery dispelled the impression that the budget had already been prepared and such seminars were not more than an eyelash. The budget, he said was still being formulated and appropriate recommendation put up in the pre-budget seminars would be adjusted. "It is PR exercise as is being aired by certain circles"' he added.

Mr. Jaffery hinted at withdrawal of exemption on certai items and broadening of tax base to cut the budgetary deficit. If measures to combat the rising deficit in the budget were avoided the country in six months or a year would be confronted with a similar economic crunch being witnessed in the Latin American countries today. Mr. Jaffery indicated that new budget would bring additional taxes worth at least Rs. 20 billion.

Seminar at Balochistan

Government Borrowings

The Government borrowings, their utilization and annual debt servicing have become number one problem of the country. The subject of Government borrowings was discussed at Quetta on May 15, 1990. The Session was chaired by Mr. Bashir Ahmad, Secretary Planning and Development Division, Government of Pakistan and the Guest Speaker, was Mr. Feroze Qaiser, Chairman, Prime Minister's Consultative Committee on Economic Policy. The people of Quetta, particularly the members of the business community and the journalists, took keen interest in the Seminar and in addition to about 60 registered participants, large number of others took part in the Seminar and discussions.

In his keynote address to the seminar, Mr. Feroze Kaiser, said that the present elected government have evolved a 4-point strategy to correct the country's economic order in accordance with economic expectations and growing aspirations of the nation. It was revealed at the seminar that the total Ushr revenue was estimated at Rs. 220 million per year. But the actual collection is just about Rs. 160 million. If corrective steps are strictly applied to the recovery of Ushr, collection could easily be enhanced by more than six times. These tables explained not only the trend of fiscal deficit but also the seriousness of the twin problems of internal and external debt and annual debt service payments. It appears that over the last 5 years the situation has been deteriorating fast as shown in table II. In this connection, it may be mentioned that according to official documents, foreign debt of the country in the middle of 1989 was PLUS 14 billion. This was contracted and disbursed and payable in foreign exchange. In addition, a big amount of contracted debt was in the pipeline, Debt service payments are now number one problem of the country and the total payments (internal and external) now exceed all other major heads of expenditure including defence and development and the Government has been forced to divert resources from development and social services to debt service payments. Table - III shows the trend of Government expenditure on defence, development and debt service payments. [Tabular Data II and III Omitted]

Mr. Feroze Qaiser, initially, described the magnitude of the problem. He said that domestic and foreign debt was now about 78 per cent of the gross domestic product. In all, total debt, domestic and foreign was estimated at Rs. 660 billion. One of the reasons for large scale borrowings was the non-development expenditure of the Government which was increasing faster than the revenue receipts of the Government. Normally, borrowing is made to finance development activities of the Government, and non-development expenditure is met from the current tax and non-tax revenues. However, now the revenue receipts are not enough to meet the current expenditure and a part of it has to be met through internal and external borrowings.

According to Mr. Feroze Qaisar, the revenue receipts of the Government are now estimated at 18 per cent of the gross domestic product while non-development expenditure at 26 per cent of the GDP. This means that current receipts are about two thirds of the current non-development expenditures and the gap between the revenue receipts and non-development expenditure is one half of revenue receipts and one third of non-development expenditure. This gap is filled by borrowings which in part, is used to finance servicing of past debts. So vicious circle has been created. So far the situation is somewhat under control. But if the trend continues, it might get out of control.

The Government appears to be bent upon to check the trend which might come through several fiscal and non-fiscal measures. First may be the control of non-development expenditure, which again is a serious problem to tackle. Inflation is adding to Government difficulties. Rise in cost of living is forcing Government employees to demand some increase in salaries and pensions. Also, the Government cannot release some Government service as the problem of unemployment is getting serious. No doubt, in some Government departments and autonomous bodies, thousands of employees are much more than the requirement. And because of the surplus staff, the heavy expenditure on it has rendered the economic and industrial enterprises non-viable. There is need to promote small scale enterprises in private sector to increase employment opportunities.

Second measure can be the improved collection of existing taxes and duties. The collection of existing taxes is stated to be unsatisfactory. For instance, 80 per cent of direct tax receipts (income tax and corporate tax) come from the salaried personnel and the corporate sector. Rest of the 20 per cent is collected from all other tax payers. According to Government sources, there are one million registered tax payers. However, a large number of them submit nil reports while a good number of others pay very small amount. Tax evasion is visible everywhere, in case of direct taxes as well as indirect taxes. Immediate action is needed to eliminate tax evasion. The black economy of the country is emerging as a very big problem.

Now, it is being estimated at hundreds of billions of rupees covering unregistered finance companies which are deceiving the people and embezzling their legitimate small saying trade in narcotics and real estate, smuggling in of foreign goods and shipping out illegally of Pakistan merchandise, and gambling and other speculative activities. The black economy is not only responsible of tax evasion but also for rise in prices of all goods and services particularly of real estate. These developments add to the socio-economic problems of the low-income and fixed income groups. Some surgery is needed to eliminate the black economy. So far the Government has tried to divert resources from black economy to legitimate economic activities but so far the success has been limited.

Another measure which has already been initiated by the Government is too reduce interest or profit on Government borrowings. For instance, the interest rate on Khas Deposit Certificates has been reduced from 15 per cent to 12 per cent. But here again problem arises. The Khas Deposit Certificates and other such schemes are being used by the low-income and fixed income groups to invest their small savings particularly after retirement from Government service. Any large scale reduction in the rate of profit is likely to nationalise the efforts of the small savings schemes by inflation. There should be some margin between the rate of profit and the rate of inflation. Otherwise the small savings schemes will collapse.

Other important measure may be the broadening of the tax base by increasing the rates of existing direct and indirect taxes and imposition of new taxes. So far most of the brunt had been borne by the salaried classes and the Corporate sector. The Government might bring under the taxation net those who are outside it and increase charges from those who pay less than legitimate level.

During discussion, it was pointed out some of the representatives of the Balochistan Province that the Federal Government should reduce staff and expenditure on those departments and services such as education which are the Provincial Governments and hand over these to Provincial Governments and also their legitimate share in Federal taxes. The view of the Federal Government was that the Provincial Governments should generate their own resources from fields such as real estate property tax, etc. The question of the taxation of agriculture was hotly debated but the forum could not arrive at an agreed step.

Seminar at Lahore

Balance of Payments

In the key speech delivered by Dr. Akmal Hussain member of Prime Minister's Economic Advisory Committee said that the gross official foreign exchange resources were available for meeting 3.3 weeks requirements last year. The resources had increased to 5.5 weeks requirements this year. Structural problems of the economy, however, persisted.

He said that 61 per cent exports of Pakistan were those of primary goods. There was a need for increasing the export of manufactured goods which fetched higher prices in the international market. This required long-term planning and creation of infrastructure facilities and trained manpower for boosting industrial production.

Dr. Akmal said that the different between the present and the previous government was that the democratic government had made its long term priorities clear and found space for its steps for the alleviation of poverty by launching the 3 billion dollars Peoples Programme for Development despite financial constraints of the IMF.

Answering a question, he said that black money volume in the economy was estimated between 7 to 19 billion dollars according to an estimate of the National Taxation Reforms Commission. It constituted 23 to 25 per cent of the national economy. He said that the 300 million dollars agreement signed by the previous government with the IMF one week before the November 1988 general elections was a booby trap for the present democratic government which has survived its adverse effects only by its diplomatic skill. He said that the international financial institutions increased only the loan requirements of the countries seeking their assistance. The speakers admitted that drastic remedies have to be applied to control government spending that gives rise to deficits in the budget, but they objected to the pace of restructuring dictated by IMF. The crisis identified by them was the IMF-recommended cutback of government expenditures, easy provision of loans and external and internal borrowing to finance the development side of the budget. The keynote speech discussed in detail the effects of the reduction of the state ability to undertake more development in the economy, further improvement of the economic infrastructure and expansion in the social sector that indirectly improves the quality of life in the country. The argument was that this reduction in expenditures would lead to lower production, a fall in state revenues with consequent accumulation of budget deficits and final inflationary collapse.

While the reason given for the anti-IMF argument were based on economics, some observations clearly reflected the Third World umbrage at what is perceived as an assault on the country's sovereignty. No country that indulges in mismanagement and lives on borrowed money is effectively sovereign. The need is to be objective about the country's ability to go it alone after flouting the sound anti-deficit doctrines handed down from IMF.

Dr. Akmal Hussain called for adopting a three-pronged approach involving development of small-scale and heavy industries and for the establishment of institutions at village and mohalla level to secure the participation of the people.

The government policy of resorting to indirect taxes was criticised by the participants, some of whom took strong exception to the policy of exempting the farming sector from the tax. Dr. Akmal Hussain said that the direct taxes should lead to better services and help in establishing a resilient economy calling for a consensus on the need to broadbase the tax structure, he said that people evading taxes "were cutting the branch on which they were sitting.

In answer to question about the destabilising effect of IMF conditionalities on the national economy, Dr. Akmal Hussain and the CBR chairman said that the risk of the IMF was not how to improve our economy. "All they are concerned about is that you should be in position to pay back the loans". Explaining IMF proposals, Dr. Akmal Hussain said what the international agency was asking was the opening-up of our economy to market forces, but in the case of Pakistan this would mean driving out of business many local industries, which could not compete in the international market. He gave the example of some advanced industrialised states like West Germany where production was linked to high quality research and management, something which Pakistan lacked.

To a question as to whether or not Pakistan was really willing to change its role from that of a beggar to that of a chooser Dr. Akmal Hussain said what was needed was to have time and space for a gradual change. The present government he said has survived terms signed by the previous government by launching a bold diplomatic offensive. By successfully negotiating with the IMF and other loan-giving agencies this government was able to have the terms softened. Which proved the growing credibility of the government in the outside world.

About government's long-term planning he said in contrast to what was termed as short-term arrangements of the previous government, the democratic government went ahead with three-fold measures to make Pakistan a strong industrial country. To provide the required infrastructure for that he mentioned the nuclear power plant deals signed by the government with France and China. /Second in the line, he said, came Hub Thermal Power Station, and Gharyala Hydroelectric Station downstream Tarbela on river Indus. The third measure he said was a |direct attack on poverty". With this aim in view the government had planned to establish manpower training centres down to Mohala and village level together with mobilisation of people to provide plenty of job opportunities.

Dr. Akmal Hussain was forthright in his condemnation of the unquestioning acceptance of all IMF conditionales. Even much smaller and less strategically placed countries had come up with more arguments thank Pakistan. Dr. Akmal Hussain suggested that one way out was for Pakistan to win relief from the IMF, ask it to sanction a moratorium on debt repayments for four or five years and let the country use the money thus saved on three things - developing an infrastructure, on spreading education and on alleviating poverty at mohalla and village level.

Seminar at Karachi

"Role of Private Sector"

In the 43 year economic history of Pakistan, both private and public sectors have played important roles in its development. However, because of several contributory factors such as continued freedom and support to private sector by the Government since Independence, except for a short period, unbalanced development of the economy, rising fiscal deficits borrowings and debt service payments sub-standard performance of the public sector industrial production units foreign aid and some other factors, the role of private sector has now become more important than the public sector. The changing global political and economic situation should place great responsibility on the Pakistan businessmen and they should plan their future activities and priorities for development of agriculture, industry and services very carefully and in a systematic manner. In this connection economic and industrial research institutions should be encouraged to guide the Government future policies and business activities according to best interests of the country.

In pre-Budget Seminars organized by the Federal Ministry of Information, the last of the series was held at Karachi, the most important industrial and commercial centre of Pakistan on 16th May 1990. It attracted a large number of intelligentsia besides around 60 registered delegates including economics, businessmen, journalists and important persons of educational and research institutions. The participants belonged to all parts of country. The Seminar was chaired by a well known economist and intellectual Mr. Aftab Ahmad Khan and Guest Speaker was Mr. T.Z. Farooqi, Federal Secretary Ministry of Industries.

Mr. Farooqi initiated his speech with the object of the Seminar to creater awareness and understanding to the problems and prospects faced by the country. He added that this Seminar was the most important as it concerned a very vital aspect of our economy. He further said that the Federal Government Budget was major instrument of Government economic policy and it should be deliberated upon by media professional economists, businessmen and Government officials. In this connection it may be pointed out that the press is debating the Budgetary issues liberally. The Budget makers should pay serious attention to their views and suggestions.

Mr. Farooqi said that the role of private sector had two important dimensions, namely(i) as a vehicle of growth and development, and (ii) as a source of mobilization of resources, particularly for fiscal purposes. The private sector is now the main vehicle of industrial development. Now the role of private sector has been extended to other economic sectors, viz. utilities, roads, health, telecommunications energy and others which hitherto to were reserved for public sector agencies. However, if the private sector is reluctant to enter any field, the Government will have to step in to serve best interest of the country. It might be useful to clearly demarcate the line between the activities of public and private sectors so that they should not compete with each other and there is no wastage of scarce resources. In fact, both should cooperate intelligently with each other in the least interest of the country to meet foreign competition, dumping efforts and manipulations. Smuggling and the increasing size of the black economy are serious problems of Pakistan and the country should eliminate these evils. The Government and the business community should cooperate intimately with each other.

The Government was following the policy of privatization, decontrol and deregulation and to rely more and more on market forces and open competition. Efforts were being made to attract increasing private investment in basic infrastructural facilities like electricity generation, construction of roads, air cargo services for exports, and the export of rice and cotton. The private sector should avail of the advantages of privatization policy of the Government along with the objectives to serve best interests of the country.

Mr. Farooqi also referred to the incentives provided by the Government to private sector. These included the establishment, of the Board of Investment headed by the Prime Minister of sanction big projects, reduction in the list of specified industrial items for 12 to 7, increasing the lower capital ceiling limit of the investment projects from Rs. 700 million to Rs. 1000 million and streamlining of sanctioning procedure and banking and D.F.I.'s facilities to provide approval and other requirements within the shortest possible time. Then he described briefly the incentives provided by the present Government to private sector.

It is encouraging that the private sector has responded well to the facilities and incentives provided by the Government. It was disclosed by the Secretary Industries that during the first nine months of 1989-90 the Board of Investment and the Development Financial Institutions issued sanctions totalling Rs. 65 billion which were more than the combined sanctions made during the three-year period of 1985-88. The commitments of the DFI's are particularly significant as these show an important step toward implementation. The D.F.I.'s approved projects costing Rs. 23 billion during the first time nine months of 1989-90 which were the same as during the three-year period of 1985-88.

Actual investment appears to have been encouraging. Despite some serious problems, overall investment in large scale manufacturing in 1988-89 was 10 per cent more than the Plan target. Mr. Farooqi emphasized the need to create an investment culture which could, inter-alia, cater to the needs of small but innovative entrepreneurs which could be encouraged to participate in the process of industrialization. The Ministry of Industries was formulating some policies in this connection.

The investment practices were not according to the socio-economic needs of the country. Industries are concentrating in a few urban centres and the people in far flung areas have been deprived to the fruit of growth. It was imperative that the industries were promoted at the grassroot level, so that the common man benefits from it. The condition of infrastructure facilities was also not encouraging. The technological problems were also serious.

The privatization policy is proceeding slowly. The Government has decided to disinvest 10 per cent shares of the Pakistan International Airlines and Pak-Saudi Fertilizer Company and 49 per cent shares of the Muslim Commercial Bank. Now, the trend of private investment appears to be encouraging. It has overtaken the public sector. During the 1970-78 period the share of private sector in fixed investment was 33 per cent, during Sixth Plan period 44 per cent, in 1988-89 it increased to 50 per cent and in 1989-90, it is anticipated at 51 per cent. The speech of the guest speaker was followed by healthy discussion which should attract serious attention of the Government. It was pointed out that raising of the minimum ceiling for sanction of a project to Rs. 1 billion was an encouraged step but there were certain difficulties after sanction of the provision of credit, import licences, import of banned items, etc. Mr. Farooqi explained that the potential investors will have to go to D.F.I's and other agencies to meet their various requirements but these agencies have been told to take much less time than before in provisions of various facilities. Mr. Farooqi also said that now the Government treated foreign investors at par with the indigenous ones but foreign technicians will not be allowed if the Pakistani technicians were available.

Other questions raised during discussion related to the difficulties of fiscal policy, law and order situation, power load-|shedding, mistrust between the Government and the private sector and the introduction of political decisions in economic matters. It was also complained that the Government has not yet issued any Industrial Investment Schedule for the 7th Five Year Plan period. Further, no information was available about the distribution of private investment among various industrial fields and package for small scale industrial fields particularly in rural areas. Lack of infrastructure in backward areas was another problem of private sector.

Some intellectuals demanded to provide results of any study about the changing of debt equity ratio from 60:40 to 70:30. It was also demanded that the Government should monitor the activities of the Banks and D.F.I's about the recovery of past loans. It was revealed that the Banks and D.F.I's were now required to submit monthly returns about the recovery of past loans to the Pakistan Banking Council.
 Table 1
 Target of Agricultural Production
 (Millions Tons)
 1988-89 1989-90 1990-91
Wheat 12.7 15.0 15.8
Cotton (bales) 8.0 8.6 9.0
Sugarcane 36.1 38.0 38.0
Rice 3.2 3.2 3.4
Source: Ministry of Finance

The seminar were a dull affair where bureaucrats explained how wonderfully they had managed the economy in the past and were doing so now. They talked of growth rates, monetary policies, budget deficits (all conditionalities imposed by the IMF). Nobody talked of education, health, housing and employment. No one said why the debts had piled up without creating balancing assets; why Pakistan's imports of agricultural commodities (milk, edible oil, etc.) were increasing; why budget deficits had gone out of control, necessitating a complete handover of the economy to the IMF; and why expansion of the economy was throttled by totally ignoring the development of the physical and human infrastructure.
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Author:Haidari, Iqbal; Khan, Abdul Majid
Publication:Economic Review
Date:May 1, 1990
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