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‘Pakistan suffered $6bn terror war losses in 2007-08’

* Planning Commission economist says IMF programme aimed at stability rather than growth
* Calls on US to double funds for Pakistan

By Sajid Chaudhry

ISLAMABAD: Pakistan has suffered economic losses amounting to $6 billion during 2007-08 while supporting the global war on terror, Dr Hafiz Pasha, heading a panel of Planning Commission economists, said on Wednesday.

Addressing the Pakistan Institute of Development Economists’ (PIDE) 24th annual general meeting, Pasha said the calculation of losses was based on a US model Washington was using to work out terror war expenses in its own country.

“This loss to the economy, according to the government of Pakistan, is over $8 billion,” said Pasha, adding that the US should double the funds being given to Pakistan for its support to the war on terror in view of the massive losses. He said the prevailing economic situation was ‘not very positive’, as tax collection had fallen, imports were very high, real effecting exchange rate was functioning at the level pf last-year and the ministries’ expenses had increased by Rs 100 billion. He, however, said the expenses of Prime Minister’s House had fallen by 35 percent.

About the International Monetary Fund (IMF), Pasha said its programme for Pakistan focussed on stability rather than growth, “which is not good for Pakistan in the long run”. “Pakistan paid a heavy price for stability at the cost of growth during the previous regime’s tenure ... and [Pakistan] should not repeat the same mistake.” Privatisation Minister Naveed Qamar later told journalists that the environment was ‘not conducive’ for privatisation because of the prevailing global economic situation, and the government was acting ‘very cautiously’.

He said that different options to resolve protracted problems of the Karachi Electric Supply Corporation (KESC) were being considered, but the government had not decided to take over control of the company again. The final decision would be made by the National Electric Power Regulatory Authority (NEPRA), he added. The minister said that Etisalat’s issues over the procurement of land with the provinces were almost resolved, and the group would soon pay an outstanding sum of $700 million. He said employees of state-owned entities would not get a share from the open market, instead they would their share would be given to them separately.

Former State Bank governor Dr Ishrat Hussain said Pakistan had to pursue ‘active monetary and fiscal policies’ to deal with the global financial crisis.

Presiding over the ‘Global Financial Crisis’ session, Dr Isharat said the global financial crisis’ conversion into an economics crisis was a unique phenomenon that had affected millions of people so far.

He said that the production and growth were faltering everywhere and people are loosing jobs – as a result of which poverty was on the rise. He said the ‘speed of damage is high’, and no one had anticipated a year ago a crisis of such a magnitude. Ishrat said nobody currently knew how long the crisis would continue.

Presiding over the ‘Trade and Industry’ session, Industries Ministry Secretary Shahab Khawaja said a shortage of electricity, gas and of skilled labour had been the major causes of decreased production in Pakistan apart from the security situation.

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