Pakistan does not need IMF support

MOHSIN KHAN, International Monetary Fund’s (IMF) Director for the Middle East and Central Asia categorically denied that Pakistan had requested any loan from the IMF. He added that Pakistan would not require IMF assistance in the next 10 months, or till the end of the current fiscal year, with two provisos: the government must succeed in slashing expenditure, inclusive of subsidies on oil and products, and accesses other sources of funding to offset falling reserves. This advice conforms to basic tenets of economic theory: a sustainable budget deficit and adequate foreign exchange reserves are critical to cauterising weak macroeconomic fundamentals, like a falling external rupee value, rising rate of inflation, and promoting investment, both foreign and domestic, in an effort to increase productivity and propel the Gross Domestic Product growth. The question, however, is whether this is doable. Can the government, for example, slash expenditure and generate other sources of funding to strengthen its reserves position? Slashing expenditure, especially on subsidies, constitutes one of the most unpopular decisions that can be undertaken by an elected government, especially given the inflationary pressures that have forced many of our low income earners to a below subsistence level income. This, in turn, has led to a rise in the number of suicides as well as a rise in the number of parents leaving their children on the doorstep of charities etc. Be that as it may, the government has reduced subsidies on oil and products and even though there is general anger against the decision of the government to continue to increase the price of oil and products in spite of the rather significant decline in the international price of oil, the fact remains that from the point of view of economic policy focused on reducing inflation this is a bitter pill that the people of this country will have to swallow for some time to come. To neutralise the effect of rising oil prices on the very poor the government has decided to extend subsidies to those living below the subsistence level through the issuance of Benazir cards and food stamps that would provide some support to them in their effort to make ends meet. Targeted subsidies are always to be supported over and above general subsidies like an across the board subsidy on the price of oil.
With respect to Mohsin Khan’s statement about the need to access sources of funding that would offset falling foreign exchange reserves, the recent statement by Naveed Qamar, the Finance Minister, is significant. He stated that Pakistan was expecting around 3.5 billion dollars by the end of September out of which one billion dollars would be released by international financial institutions (IFIs), a fact reconfirmed by Mohsin Khan, and the remaining 2.5 billion dollars from remittances. The State Bank of Pakistan reported that total remittances received (July-April) 2007 were $5.3 billion - an increase of $868.96 million over the corresponding period last year; and if this trend continued remittances would rise by $5.8 billion by the end of June 2008. However if the 2007-08 trend continues till the end of September 2008 then the remittance income would be around 1.4 billion dollars by the end of September and not the extremely optimistic figure quoted by the Finance Minister of 2.5 billion dollars.

Sporting prowess

WITH just four days to go before the Beijing Olympics end, it is already clear that China, alongside the US, is now one of the world’s leading sporting nations. It has so far won more gold medals than any other country although the US has won more medals. The idea that it is to be expected that countries with massive populations should win more medals than small ones may seem logical but in that case, India should have won medals in abundance. It has won only one and although Abhinav Bindra is understandably now a national hero, the fact is that population size bears no relationship to sporting prowess. Further proof of that is seen in the fact that until yesterday at least, third and fourth places in the ranking for gold medals in Beijing were held by the UK (15) and Australia (11). Compare that to the days before the collapse of communism, when the former Soviet Union and its satellite nations in Eastern Europe scooped up medals by the bucketload. In 1988 in Seoul, the last Olympics before the Soviet Union collapsed, it led the field winning 132 medals of which 55 were gold; East Germany came second with 37 gold out 102 medals. Hungary won 11 gold, Bulgaria 10 and Romania seven. At those same Olympics the UK won five gold and Australia only three. In Beijing, Russia has so far won a mere 10 gold medals and together with the other countries of the former Soviet Union, the tally is 17 while the united Germany has won 11 gold, Bulgaria one and Hungary none at all. There is still time to win more, but the overall decline compared to the past is not going to be arrested. There is a reason for the success presently enjoyed by China, the UK and Australia and the decline of Russia and other former Communist countries. It is the same reason why the US continues to perform well and why countries such as France, Spain and Canada which achieved great success at earlier Olympics now languish in the doldrums. That reason is investment. Like China today, the old Communist countries used to invest heavily in sport, sending their promising young athletes to specialist academies. They no longer do so, and the consequences are plain to see.
For their part, the Americans have always paid great attention in colleges and universities to cultivating their sportsmen and women and it continues to pay off. As for the British and the Australians, both took a deliberate decision to foster sports and athletics — the Australians first, with the Australian Institute of Sport, spurred on by the humiliation of the 1976 Montreal Games when it failed to win any gold and only one silver. The British copied a couple of decades later, setting up national sports centers and colleges and investing hundreds of million of pounds in a wide variety of sports. That investment has clearly paid off. There is lesson here for other countries, not least Saudi Arabia and other Arab states, whose performance at the Olympics has been — it has to be faced — miserable. There are some 340 Arab participants at the Games, about 30 more than the British delegation and 10 fewer than the Japanese team which so far has won eight gold medals. Arab competitors have won so far a total of two gold, one silver and three bronzes. In any competition, someone has to lose. But time after time? The authorities here are committed to investing in education for the future, to ensure a pool of skilled excellence on which the economy can grow and diversify economy. Billions of riyals are being spent on new universities and colleges — but what about sporting achievements? Sport is important to any nation and Saudi Arabia is no exception. Saudi Arabia can afford to invest in sports academies. It should do so. It can become the center of Arab sporting excellence.
 

—Arab News