State of Pakistan

April 29, 2008 By Jayshree Bajoria

Indian Prime Minister Manmohan Singh speaks with Iranian President Mahmoud Ahmadinejad in New Delhi on April 29, 2008. (AP/Saurabh Das)

Iranian President Mahmoud Ahmadinejad’s April 29 visit (IANS) to the Indian capital sparked a verbal spat (NYT) earlier this month between New Delhi and Washington. After the Bush administration urged New Delhi to call upon Ahmadinejad to comply with international requirements on Iran’s nuclear program, India’s foreign affairs office responded (PTI): It did not need “any guidance on the future conduct of bilateral relations.” The exchange brings into sharp focus the challenges facing India as it asserts itself on the global stage.

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From DAWN of April 28, 2008 

By Yousuf Nazar 

“ Pakistan’s fiscal crisis is deep and cannot be easily resolved. Taxes are insufficient for debt service and defence. If the tax to GDP ratio does not increase significantly, Pakistan can not be governed effectively, essential public services can not be delivered and high inflation is inevitable. Reform of tax administration is the single most important economic task for the government.”  

[Quote from Report of General Musharraf’s June 2000 Task Force on Reform of Tax Administration]

If the big business and landed aristocracy could be convinced that by eliminating the budget deficits, they stand a good chance of trebling the value of their property and stock holdings, they might start paying taxes. But what might persuade them to do that? Read more »

By our correspondent 4/28/2008

Karachi The newly-inducted government has inherited an unstable economy and needs time to settle various pending issues since the previous government had no policies at all nor did they have reliable models.Federal Minister for Information and Broadcasting Sherry Rehman stated this on Sunday while speaking as chief guest at the launching ceremony of The Gathering Storm — a warning about Pakistan’s political and economic crisis. The book is authored by Yousuf Nazar, an emerging market expert and one of Pakistan’s leading economic commentators. The federal minister criticised the models of the previous government and stressed that the new setup needed time to settle various issues. “They (the previous government) had no agricultural or social policy, nor did they have any policy on energy conservation or on water,” she said. “We have to live with the shocking reality that we have been given the affairs of a country that has fifth highest inflation rate,” she added. Sherry said that she has been following Yousuf Nazar’s articles, adding: “We have also saved his writings for discussion in our group meetings since his ideas, despite being anti-establishment, are refreshing”. While comparing the policies of the previous government with that of India a few years back, she said that, “The ‘India Shining’ message led to the collapse of the BJP government and the message was clear but they learnt nothing”.

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By Mark Shenk

April 21 (Bloomberg) — Traffic jams in Beijing and humming air conditioners in Dubai are replacing U.S. highways and suburbs as the driver of global oil prices.

China, India, Russia and the Middle East for the first time will consume more crude oil than the U.S., burning 20.67 million barrels a day this year, an increase of 4.4 percent, according to the International Energy Agency in Paris. U.S. demand will contract 2 percent to 20.38 million barrels daily, the IEA says. Read more »

By John Authers, Investment Editor of the Financial Times 

There will be blood. Crude oil prices took another staggering leap upwards yesterday, to the hitherto unimaginable level of $113.93 per barrel. Such prices, if sustained, can only have severe economic effects. Read more »

By Alan Beattie and Javier Blas

As manager of Unga, a maize miller in the Kenyan capital Nairobi, Dale Wiest sees the effect that panicked trade restrictions are having on global food prices only too clearly. Last year he bought half his grain from neighbouring Tanzania. But after a bad harvest, the country banned exports in January. “Since then, we had been unable to purchase there,” he says. Maize prices in Kenya are a third higher than a year ago and Mr Wiest is pessimistic. “I think prices will rise more,” he says. Food production, like most industries, has become increasingly globalised as transport has become cheaper and communication more efficient. But trade in food is far from free: as with textiles and garments, it has long been constrained by government intervention. The resulting distortions have helped to shape a crisis that has seen food riots in about 30 countries this year - and the export bans being imposed by governments across the world are exacerbating it.  Read more »

From Dawn of April 14, 2008

By Yousuf Nazar

There seems a dangerous disconnect between the economic challenges confronting Pakistan and its response to it. The leadership’s inability to anticipate their gravity and the inadequacy of its response could prove disastrous for Pakistan. Last week, Finance Minister Ishaq Dar presented the ‘balance sheet’ inherited from the previous government as of March 31, 2008 in the presence of the top bureaucrats who had been closely associated with the past regime. He rightly pointed out that the budget deficit has hit unsustainable and highly inflationary level and cut the real GDP growth estimate for the current fiscal year to 6 per cent from 7.2 per cent and revised the inflation estimate from 6.5 to 10 per cent. Read more »

The Associated Press

Sunday, April 13, 2008

KABUL, Afghanistan: A coalition helicopter trying to supply Afghan police with munitions dropped supplies in the wrong location and Taliban fighters later recovered the weaponry, an intelligence official said Sunday.

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By Alan Beattie and Javier Blas of the Financial Times

Could record food prices be their own cure, spurring farmers around the world to lift production? A recent fact-finding trip to Kenya by Josette Sheeran, director of the United Nations World Food Programme, provided little evidence to support this view. Read more »

From  DAWN  of April 7, 2008

By Yousuf Nazar  

The State Bank of  Pakistan’s quarterly report covering the country’s economic performance for the first six months (July-December 2007) of the current fiscal year confirmed what was already in the public domain. Key economic targets for the current fiscal year will be missed and the government’s finances are under pressure. But a close examination of the official data has led us to raise the following critical questions: Is the government revealing the correct real GDP growth numbers by understating the rate of inflation?  Is the economy growing by 6-6.0 per cent?   Is oil price the only or real reason for the ballooning fiscal deficit and consequently for the rapid growth in money supply and inflation?  The answer to both the questions is a NO in the light of the information published by the bank itself.

April 4, 2008

Blog Note: The ‘escape’ of Abu Yahya al-Libi is difficult to explain. Why was he kept in Afghanistan in the first place?

On the night of July 10, 2005, an obscure militant preacher named Abu Yahya al-Libi escaped from an American prison in Afghanistan and rocketed to fame in the world of jihadists.

The breakout from the Bagram Air Base by Mr. Libi and three cellmates — they picked a lock, dodged their guards and traversed the base’s vast acreage to freedom — embarrassed American officials as deeply as it delighted the jihadist movement. In the nearly three years since then, Mr. Libi’s meteoric ascent within the leadership of Al Qaeda has proved to be even more troublesome for the authorities. Read more »