1. State of the economy.


THE third quarterly report of the State Bank of Pakistan on the state of the economy indicates a bumpy road ahead and should serve as a warning against complacency. Despite a number of positive developments, the message delivered is that the economy is still not out of the woods and faces a number of vulnerabilities.
The country has reaped bumper wheat and rice harvests and there is a likelihood of good production in the minor crops also, thanks to good weather and, in the case of wheat, timely announcement of the new support price. It is heartening to note that the headline inflation, measured by CPI, dropped to 17.2 percent on Year on Year basis in April 2009 from its peak of 25.3 percent YoY in August 2008. What is real good news is that there has been a sharp downturn in food inflation, which fell from its YoY peak of 34.1 percent in August 2008 to 17.0 percent in August 2009. This would provide a modicum of solace to low-income groups. It is also good to learn that current account deficit narrowed substantially with a corresponding stability in the exchange rate. Further, fiscal discipline was maintained leading to hopes that GDP growth would narrow to 4.0 to 4.5 percent this financial year from 7.4 percent last year, though the report notes that the target might be tough to meet. There are however numerous deficiencies that need to be overcome if the growth rate, lowered to between 2.0 and 3.0 percent from the previous estimate of 2.5-3.5 pc, is to be met. Three major indicators point to underlying weaknesses which, if not addressed, could hamper economic recovery. These include a stubbornly high inflation, a massive deterioration in the external account and a declining industrial output, especially in the Large Scale Manufacturing sector which has suffered an output fall of 7.7 percent over the last nine months. Besides the internal vulnerabilities, there are other possible shocks that the economy would find hard to bear. Foremost among these is any big rise in the price of oil, an issue that continues to worry even the US and was taken up by President Obama with Saudi King Abdullah early this week. The State Bank rightly underlines that any reduction in the social sector development would be detrimental to human and physical infrastructure. The NEC on Thursday approved the highest ever Rs 621 billion PSDP for 2009-10. What is worrisome is that the Chairman Planning Commission hopes to use foreign inflows of around $2 billion to further enhance the PDSP. Relying on promises of foreign assistance is like skating on thin ice. One hopes the government will not this time treat the PSDP as the first item to be axed in case of a revenue shortfall.



2. Corrupt bureaucracy.



THAT the bureaucracy tops the list of most corrupt institutions in Pakistan in a report recently released by Transparency International is a clear comment on the government's anti-corruption mechanism. The judiciary and the law enforcement agencies closely tail behind while political parties have been rated less corrupt compared to their counterparts in India.
The survey, conducted with more than 73,000 respondents drawn from 69 countries around the world, also found the poor to be disproportionately burdened by bribe demands. Forty percent of the Pakistani respondents felt that that the existing channels for making complaints against corruption in the government departments had become ineffective. Most of them polled said that either they themselves or their family members had to pay bribes at different levels in the bureaucratic set-up to have their genuine problems solved. Transparency International must also have covered the Punjab, where the bureaucracy, enjoying all powers otherwise supposed to be exercised by the Cabinet, has not been able to improve the public delivery system. The practice of holding open kutcheries by the administrative heads of all provincial departments has turned out to be counter-productive. The federal and provincial governments will have to purge the bureaucracy of the corrupt elements before moving on to deal with the menace in other institutions.
The TI report should serve as an eye-opener for those who keep basking in the glow of having established good governance and the rule of law. It bears repeating that both the mainstream parties were voted into power on the promise of compensating the masses for the excesses committed against them by the previous regime over the past nine years. There is a need for immediate overhaul of the anti-corruption apparatus, if those in authority want to avoid the consequences of an increasingly alienated and distrustful citizenry.



3. CM's ambivalence.


THE problem with populist politics is actually practicing it. Savouring public admiration over its principled stance of sacking its NA-55 MNA was all well and good, but the PML-N finds that the public now expects such public executions all the time. Case in point: the League's Prisons Minister in the Punjab. Chauhdry Abdul Ghafoor misbehaved with Customs officials at the Lahore Airport and whisked the luggage of his guest away without it being checked. If he now says he was not aware of the procedure he should not forget that ignorance of the law is no excuse. But there are several issues to be looked at here. First of all, whether all demands by the public to sack someone should be humoured? The public might perceive something that is not true at all. And would it be disrespectful to the constituency to summarily make a decision like this? Legislators are, after all, voted through a direct election. Secondly, where does one draw the line here? What offence warrants a dismissal or a resignation? Surely, an overspeeding ticket doesn't. But what tipping point does?
But the most important aspect here is not the two mentioned above. It is that of building parties as institutions. A three-member party tribunal ruled that the minister was, in fact, guilty. The ambivalence of the Chief Minister on the issue after this ruling is far from admirable. True, the ruling of the body is not legally binding but if the ruling could be rejected, why go for an investigation in the first place? If the party had issues with the investigation, it could have reconstituted the tribunal. Instead, the party leadership is saying, by implication, that it'll do whatever it wants.



4. Stop sermonising.


FOR a career diplomat, Richard Holbrooke's statement in an IDP camp was out of line. Asking where the OIC was at a time like this was rather cheeky. Even though the problem of militancy is homegrown and we have got to face up to the fact that this is our war, there is no denying the role of the US in our history that has led things to this level; we are where we are because of them. In the light of all this, the US should cut down on sermonising to us or any other third country, and come up with more aid and better suggestions on how to handle the IDPs. This is, in his very own words, one of the largest displacements of people in history. If diplomats from powerful countries like his could lay off the cheek and focus more on the aid and support, far more could be done to help out our displaced brethren. Speaking at a press conference later on, he asked all the journalists present to ask questions only about the IDPs. Perhaps he should heed his own advice and talk only about Pakistan, Afghanistan and the US, whose envoy he is to the other two.

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