Outlook for the economy

THE Asian Development Bank’s Development Outlook Update report for 2001 has projected a slow down in Pakistan’s economy to below 5 per cent and a jump in the rate of inflation up to six per cent for the current financial year. The bank’s projections are based on the economic benchmarks recorded at the end of 1999-2000 and also on the progress that was being made subsequently on the reforms front, especially the reforms relating to the IMF’s Standby Arrangement (SBA) which ended on Sept 30, 2001. The report, however, does not take into account the impact of the massive gains and equally massive losses the economy has incurred in the aftermath of the Sept 11 events. Still, one cannot minimize the value of the report, as it gives an indication of what was in store for the economy if the Sept 11 tragedy had not occurred. Things seem to have become even more confusing for the economy in the aftermath of the attack on the WTC and the Pentagon.

True enough, the economy has gained significantly in the aftermath of the terrorist attacks in the US. All the sanctions have been lifted. Pakistan’s debt burden has been reduced significantly. The IMF has approved a three-year loan of 1.3 billion dollars under its Poverty Alleviation and Growth Facility (PRGF). Europe has allowed enhanced market access for Pakistani textile goods, and the US is engaged in legislating a similar measure. About a billion dollars have come into the State Bank coffers by way of grants from the US, Europe and Japan. More of the same is expected in the coming months from various other bilateral sources. The OPIC and EXIM Bank of the US have started their operations in Pakistan, paving the way for increased investment flows from America. The slide of the rupee has not only been arrested but, in fact, the currency has appreciated and stabilized, remittances have soared and foreign exchange reserves have shot up to well beyond four billion dollars. These gains have given Pakistan room to restructure its economy so as to make it more productive without having to keep a tight leash on the expenditure needed to cushion the socio-economic and financial shocks of such restructuring.

On the other hand the finance minister said in a newspaper interview that the country would suffer a loss of about three billion dollars because of the negative impact of the Sept 11 events. Increases in freight rates and the imposition of war-risk insurance will increase the cost of imports and make Pakistani exports less competitive. The cancellation of air cargo flights by foreign airlines will disrupt trade flows. And the possible departure of expatriates from the country and the suspension of visits by foreign buyers will not allow the country to maintain normal trade relationships. Furthermore, revenue collection will also suffer owing to lower imports. Exports, too, are expected to decline significantly. Foreign investment flows will dry up. As a result, output losses will be severe and GDP growth will either be stagnant or negative depending upon the intensity, duration and scope of the war on terrorism.

In the short run all these losses will militate against a quick revival of the economy. They may even cause a serious delay in the urgently needed restructuring of the economy, threatening a further deepening of the three-year long recession. However, if the government could make an intelligent and creative use of its new-found political and diplomatic clout with the developed world, it may even succeed in getting removed some of the unnecessary road blocks in the way before their presence starts neutralizing the gains. We could engage more frequently in the G-8 countries both bilaterally and multilaterally on economic issues and send as many trade delegations as possible trotting all over the globe at least during the next six months to explain to the donors how their general policies are hampering their own particular economic objectives in Pakistan.

The art bazaar

DOES an art bazaar cheapen the value of works of art? This is the question that is being debated among artists as the country’s first ever formally sponsored art bazaar is scheduled to be launched in Islamabad on Jan 6. The idea, based on the concept of art bazaars in major European cities like London, Paris, Rome and Venice, is being supported by the Pakistan National Council of the Arts (PNCA). Artists are being encouraged to book stalls to display their works at the bazaar, which will be held every Sunday at the National Art Gallery. The PNCA will also be putting up its own stall for those artists who for some reason or the other will not be having their own stalls. Interestingly enough, some of harshest critics of the idea of the art bazaar are senior artists, who argue that art was not to be sold like vegetables in a marketplace. These critics believe that the art galleries should be the place where artists’ works are displayed and through which art is promoted.

Undoubtedly the role played by art galleries is important but not exclusive. Art bazaars, too can have a useful role to play in the promotion and appreciation of art. In the first place, the art bazaar provides a podium for more and relatively unknown budding artists to get a greater chance of having their works displayed and bought by art lovers. In fact, some artists in the West, who later became household names in the international world of art, first got their names made in this way. Secondly, many art lovers who cannot afford the kind of prices usually tagged on paintings exhibited at prestigious art galleries will get a chance to own a genuine painting or two, even if it is by an unknown artist.

A senseless act

THE baton charge on a peace rally near the Wagah border on Monday is a shocking incident that deserves to be condemned. The unprovoked scenes of violence occurred when a group of activists tried to hold a peaceful rally at the border to protest against the current war hysteria between Pakistan and India and to condemn all forms of terrorism. Among those present were a number of distinguished citizens, who were set upon by the rangers and treated like common criminals. The men who manhandled the protesters used batons to break up the rally and tore up the banners and white flags carried by the participants. The soldiers were acting on orders from their commanding officer, who had unilaterally decided not to allow the protesters to get close to the checkpost. This despite the fact that permission to hold the rally had been obtained from the home minister as well as the area police. Incidents of this nature have no place in a civilized society. Breaking up a peaceful rally meant to draw attention to the dangerously tense situation on the borders seems a completely senseless act. Former chairperson of the Human Rights Commission of Pakistan and UN rapporteur on human rights Asma Jehangir, who was among those manhandled, absolved the government of all responsibility for the incident and blamed the commanding officer for triggering off the ugly incident. The government must urgently hold an inquiry into this grave matter and reprimand those found guilty of provoking an incident that can only bring a bad name to this country.