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Former Governor of State Bank of Pakistan and present Dean of Institute of Business Administration (IBA), Karachi, Dr Ishrat Husain, underscores the need for making the constitutional bodies such as Council of Common Interest (CCI) and National Economic Council (NEC) effective forums for better co-ordination between the federal and provincial governments to draw up budgetary plans and then have a co-ordinated approach towards development and drawing up of Public Sector Development Programme (PSDP). The centre - the federal government - is unhappy with provinces where PML (N) has been unable to form governments, and would, therefore, like to go back to the old ways, ie the constitutional arrangement prior to the passage of the 18th Amendment and the agreement under the 7th NFC award. The bureaucracy in Islamabad is used to passing orders and having the provinces fall in line. They conveniently forget that Pakistan is a federation and does not have a unitary form of government that Islamabad had become used to. The 1973 constitution created the CCI and NEC because there was a PPP-led government at the centre, in Punjab and Sindh. But a coalition comprising National Awami Party (NAP) and Jamiat Ulema-e-Islam (JUI) was in power in NWFP (now KPK) and Balochistan. Zulfiqar Ali Bhutto had his tutelage under the military regime of Ayub Khan and could not practice real federalism. What was conveniently forgotten that All-India Muslim League fought for freedom and agitated for a weak centre and strong provinces while the Congress had the reverse in mind. Unfortunately, both parties had to change their stances once in power.

Only time will tell if the arrested four including the mastermind of the Safoora Goth carnage are the actual culprits or just a make-believe show the police would put up to tranquillise the agitated public mind. But in this case the kind of progress claimed by the head of investigation team in unravelling the murderous plot and its execution in all its gory dimensions carries an unmistakable ring of authenticity. No wonder then Interior Minister Chaudhry Nisar Ali had turned up in just no time to claim "positive" progress in the direction of investigation and Chief Minister Syed Qaim Ali Shah got the much-needed oxygen to salvage his sullied image. If the said incident was the outcome of RAW's anti-Pakistan grand design the investigation may throw light on that too. However, so far the Safoora attack in which 45 Ismailis were massacred carries the stamp of religious extremism that is so much the lingering bane in Pakistan, particularly in the mega-city of Karachi. According to information released by the investigation team head Additional IGP Karachi Ghulam Qadir Thebo, the attack was carried out by 11 militants, and all of them are members of a militant group "inspired by al Qaeda"; he, perhaps didn't think it proper to say it is the self-styled Islamic State. The arrested suspects also owned up nearly all terrorism incidents in Karachi that they committed during the last six months or so. They have claimed killing of human rights activist Sabeen Mahmud - for her pro-America liberal worldview and not for hosting Mama Baloch; attack on Bohra community members; and off and on policemen in the city's labyrinths. The said 11 militants had 'regrouped' to fill the space vacated by others in that business under the pressure of year-long targeted group. Arguably, if all major terrorist incidents since end of last year were nearly exclusive product of this gang of 11, with them now thrown out of business the city of Karachi should be free of violence at least for some weeks and months. The residents will watch and wait.
The Federal Finance Secretary Waqar Masood informed the Parliament's Standing Committees of both houses on Finance that the growth target for the next fiscal year has been fixed at 5.5 percent and development spending at 580 billion rupees. He has also clarified that the inability to meet the growth target for the current fiscal year by 0.9 percent is attributable to floods, a fall in commodity prices in the international market (though the decline in oil prices created fiscal space as well as reduced the trade deficit) and a decline in Large-Scale Manufacturing (LSM) growth - factors ostensibly beyond the control of government policies. However, one would assume that LSM sector may hold the government responsible for its poor performance on three counts: (i) failure to resolve the energy crisis that continues to plague the country's productive sector accounting for Pakistan having the lowest GDP growth rate in the region today (barring Afghanistan), (ii) a rupee-dollar parity that is not helpful and which is causing an adverse impact on the country's exports, and (iii) heavy domestic government borrowing that is crowding out private sector borrowing and disabling it from becoming the engine of growth.
As part of its anti-terrorism campaign the Punjab government has recently been acting tough against the purveyors of religious hatred. A number of cases have been registered against prayer leaders for making hate speeches against members of religious communities different from their own. A press report has now come up with details of an ongoing drive against producers of hate literature. According to official record, as many as 452 cases have been registered in the province in the first four months of the current year. Four hundred and seventy persons were arrested during this time on account of hate material publication, and legal proceedings started in 260 cases. However, the conviction rate has been rather low: 24 guilty verdicts out of the 66 cases decided so far. The key reason is a lack of co-ordination between different components of the oversight and implementation mechanism.
The State Bank of Pakistan has reduced its policy rate by one percent or 100 bps; it has, however, protected the small saver by keeping the floor at five percent and slashing the rate only by half (0.5 percent). Priority, this move will primarily impact large network banks having a higher number of saving accounts. Mid-tier and small banks already pay a higher rate on saving deposits than the big five do; their deposits mainly constitute term and time deposits. The government would also lose some tax from big ones since their interest payments will be higher and lending rates lower than before, thus squeezing their profitability.
The four suspects arrested for the massacre of 45 members of the Ismaili community in Karachi are reported to have also confessed killing human rights activist Sabeen Mahmud because of her campaign against the Lal Masjid cleric, Abdul Aziz. Alumni of reputable educational institutions, these young men had connections with the violent extremists in the tribal areas and shared their hatred of Shias. According to investigators, they massacred the Ismailis both out of a sectarian motive, and to create an impact at the international level of their ability to wreak terror. Many find it hard to deal with the fact that these men have good educational backgrounds and belong to well-to-do families contrary to the common image of a terrorist who is poor and usually product of a madressah.
Federal Finance Minister Mohammad Ishaq Dar has done well to timely clarify that there shall be no tax on foreign remittances. He has, therefore, laid to rest any apprehension that may have risen in recent days. How ironic it is that those who man country's tax machinery often lose sight of the fact that the law provides a legal cover and therefore any remittance from abroad shall be exempt from any inquiry by tax offices. Dar's intervention to protect this vital inflow, which is by and large, is keeping the country's economy afloat and the current account deficit under control ($1.4 billion). Pakistan is likely to suffer a large trade deficit of 17 billion dollars. And, 16 billion dollars received in remittance would cover this trade gap. Even a fall in international oil prices would not have been able to bridge this trade gap since saving on POL import is equivalent to higher imports of other commodities. And, exports are also weak due to softening of international prices and their fall may be due to supply side constraints such as energy shortages, infrastructural collapse and low labour productivity.


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Banking Review 2014

Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
Trade Balance $-1.795 bln
Exports $1.995 bln
Imports $3.790 bln
WeeklyMay 26, 2015
Reserves $17.749 bln