Last update: Fri, 29 Jul 2016 07am



The present government is famous for favouring the process of privatisation, deregulation and liberalisation of the economy. However, the recent statements of some of its ministers are not quite in synch with its pronounced policy position. Addressing the launch ceremony of Policy Research Institute of Market Economy's (PRIME) 7th Tracking Report in Islamabad, Minister for Planning, Development and Reform, Ahsan Iqbal sought to justify the halt in privatisation of Discos, saying that investment in energy sector would be discouraged if government goes for privatisation at this stage. "The privatisation of energy sector will stall investment on the distributional capacity enhancement because privatisation is a lengthy procedure taking as long as two years to be completed. The government is focusing on corporate governance after which Discos will be privatised which would fetch higher prices," the Minister added. The country will produce more than 10,000MW of electricity by 2018 but the distribution system will not be supportive if the necessary investment was not made. Investment of $3 billion was made for modernisation of distributional capacity which was now limited to 16,000MW.
The much-needed amendments to the National Accountability Bureau (NAB) law, hanging fire since the last PPP government's rule, are finally under discussion at the appropriate forum. The National Assembly's Standing Committee on Law and Justice has constituted a sub-committee comprising representatives from the PML-N, PPP, PTI, MQM and JUI (F) and headed by PPP's Naveed Qamar to make necessary recommendations aimed at putting in place an effective and impartial accountability mechanism. The issue has assumed urgency in the wake of various corruption scandals involving persons in high places, though for the same reason it may not be easy for the committee to arrive at a consensus.
In a joint communiqué the Group of 20, constituting an international forum of governments as well as central bankers from 20 major economies, stated that Brexit, Britain's vote to leave the European Union, heightens risks to the global economy but vowed to use all policy tools to boost growth. However, while the objective was common to all 20 countries yet the methodology would vary from country to country with Germany reluctant to endorse enhanced government spending to boost growth and the US Treasury Secretary maintaining that "it would be a mistake to think about the choice of tools as being either/or when it comes to structural reforms or using fiscal space." Thus the communiqué left it open for individual members to use all policy tools - "monetary, fiscal and structural - individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth."
The Dubai meeting of the Pakistan People's Party (PPP) leadership has decided to show octogenarian Chief Minister Sindh Syed Qaim Ali Shah the door. The 'surprise' decision could have been anticipated since in recent days the air was full of speculation that a change was coming. Of Qaim's three terms in office, the second one, 2008-13 was the only full one. In the current term, his ministry was beset with a whole series of new problems to add to the perception of ineffective governance that dogged his footsteps in earlier stints. Amongst these new problems, the Rangers operation against terrorists and criminals in Karachi perhaps proved the reef on which Qaim's ship finally foundered. The issue of the extension of the Rangers' mandate reared its head again and again, complicated further by the recent incident in Larkana in which Home Minister Anwar Siyal got implicated as a result of his brother Sikandar Siyal's attempt to come to the rescue of Asad Kharal, arrested by the Rangers on corruption charges. This highlighted the desire of the military-backed Rangers to have their mandate extended not only in Karachi but further to all of Sindh. The perception is that Asif Ali Zardari, Bilawal Bhutto Zardari and the senior leadership of the PPP were dissatisfied with Qaim Ali Shah's handling of the Rangers issue, in which they found him too 'soft' and pliable. However, just as Qaim could not defy the will of the security establishment without risking the Sindh government per se, it remains a moot point whether his successor will be able to do any better. Given Karachi's importance as the industrial, commercial and financial hub of the country and the decades old unrest, terrorism and crime that held the city hostage, the establishment's impatience with ineffective civilian governments fed into the pressures applied and visible, especially since 2013, on the Sindh government. In this obtaining scenario, it is unlikely his successor will not face the same scenario. In addition, there has been a widespread perception that Qaim was largely a 'showpiece' chief minister, and that the province was actually being run in all important respects by multiple power centres, all roads from which eventually led to Asif Ali Zardari abroad. If Qaim Ali Shah was squeezed between the rock of the establishment and the hard place of multiple power centres dictating affairs in Sindh and answering only to Asif Zardari, what is the guarantee that his successor will not face the same fate?
The Finance Department of Khyber Pakhtunkhwa (KPK) has initiated reforms targeted towards improving service delivery, fiscal management and accountability through publishing a 'citizen's budget' which is defined as assisting the non-specialists in understanding the budget documents and its linkage to the medium-term budgetary framework. Upon taking over the provincial government, the PTI-led administration in KPK had also constituted sectoral co-ordination committees that focused on enhancing fiscal space for development as a forum for collaboration between revenue generating departments and development partners under the umbrella of Strategic Development Partnership Framework (SPDF). These are praiseworthy measures and indicate a genuine desire of the provincial government to facilitate an understanding of its guiding principles in terms of levying specific taxes, expenditure priorities as well as open avenues for timely course correction within the departments through the establishment of internal audit cells. In turn, these audit cells are envisaged as the eyes and ears of the Principal Accounting Officer in the department which in turn would enhance accountability.
Prime Minister Nawaz Sharif chaired the National Security Council's long overdue meeting on Friday. Although initially scheduled to discuss the border tensions with Afghanistan and some internal security issues, sudden escalation of violence in the Indian Occupied Kashmir dominated deliberations of the meeting attended by the top brass and the PM's senior advisers and cabinet colleagues. Various steps taken by the government to draw the world attention to the situation were endorsed and the UN urged to fulfil its commitments towards the people of Jammu and Kashmir. Earlier, July 20 was observed as the Black Day to express solidarity with the Kashmiri people facing incessant state violence. Unfortunately, however, the controversial leader of the Jamaat ud Dawa, Hafiz Saeed, who is on the US' wanted list, was allowed along with some others, to mark the day by leading a Lahore to Islamabad rally. That did more harm than good to the Kashmir cause, providing an opportunity to New Delhi to try and accuse Pakistan of instigating trouble in the Valley.
Foreign Direct Investment (FDI) received by the country during FY2015-16 would appear to be very encouraging in percentage terms. According to the latest data released by the State Bank on 20th July, 2016, it rose by as much as 39 percent during 2015-16 to reach $1.281 billion as compared to $923 million during FY15. A major boost in FDI was provided by Chinese investment mainly under the China Pakistan Economic Corridor (CPEC) which shot up to $594 million in FY16 as against $257 million in the previous fiscal, registering an increase of 130 percent. The second highest FDI was from Norway, with the amount rising to $172 million followed by the UAE ($164 million), Hong Kong ($130.9 million) and Italy ($103.5 million). However, FDI from the US turned negative by $65 million in sharp contrast to the inflow of $08 million in FY14-15. The net outflow of portfolio investment during FY16 was also $319.7 million. Sector-wise, FDI in power sector more than doubled, jumping from $219 million in FY15 to $566.6 million during 2015-16. Oil and gas exploration sector, despite being the second biggest attraction for FDI, however, underperformed with the FDI falling to $261 million this fiscal from $299 million a year earlier. Information technology showed a disinvestment of $14.7 million compared to the disinvestment of $20 million in FY14-15. The most significant fall in FDI was noted in the case of financial business. It could hardly attract $28 million during FY15-16 compared to $256 million in the previous year.