Karachi's Business and Political Elite Welcome Musharraf
At a gala reception in President Musharraf's honor by Karachi's business community, business leaders including Khalid Tawab, Mian Zahid Hussain, Abdul Haseeb Khan, Majyd Aziz warmly welcomed the President and reiterated their full confidence and support for him. Governor Sindh Dr. Ishartul Ibad Khan and City Nazim Mustafa Kamal also joined in the welcome, according to Karachi's Business Recorder newspaper.
The President thanked the community and called upon the industrialists to help promote rapid industrialization, investment and jobs creation in the country. He met with a delegation of leading industrialists and chairmen of industrial estates, which called on him at the Governor's House in Karachi on Monday. Sindh Governor Dr Ishratul Ibad Khan was also present on the occasion. The members of the industrialists delegation told the President that the number of factories at Nooriabad Industrial Estate in Dadu has grown from 17 in 1999 to 70 now.
Pakistan's tax base has grown with rapid economic growth over the last 9 years. The President lauded the performance of the Federal Board of Revenue and said that tax collection had crossed Rs 1.02 trillion in 2007 from Rs. 500 billion in 1999. With the revenue growth target for the next five years set at an ambitious 25% per year, the tax base and collection efforts need to continue to expand. Pakistan needs to build confidence to stop flight of capital and grow its exports, he added.
Why is it important to grow Pakistan's tax base and revenue collection, now more than ever? Government spending will jump 30 percent to 2.01 trillion rupees ($29.8 billion) next fiscal year from 1.55 trillion rupees in the previous 12 months, according to acting finance minster Naveed Qamar's budget proposals for 2008-2009. Outlays on subsidies on items including food, power and fertilizer are forecast at 295 billion rupees.
Confusion over who is managing Pakistan's $146 billion economy has deterred much-needed foreign investment, which has already fallen this fiscal year for the first time since at least 2004, according to Bloomberg.com. Standard & Poor's, which reduced its debt rating for Pakistan on May 15, said in mid-June that the government's revenue and expenditure targets faced "significant implementation risks." Pakistan's rating would be lowered if fiscal and current account deficits do not improve, S&P said in a statement.
As part of his tour, the President also visited the State Bank of Pakistan (SBP), along with Governor Ishratul Ibad Khan, where he met with the State Bank Governor Dr Shamshad Akhtar. The State Bank of Pakistan on May 23 unexpectedly raised borrowing costs by 1.5 percentage points to 12 percent, the second increase this year, to curb runaway inflation. "Higher interest rates and a steeper drop in growth still lie ahead," Philip Wyatt, a senior economist at UBS AG in Hong Kong told Bloomberg. "The fiscal funding problem is precarious and unsustainable in current global conditions."
Among the political leaders, the President met with Pakistan Muslim League (Functional) Chief Pir Pagara, who called on him. The details of this meeting were not immediately available.
The President emphasized the need for national consensus in Pakistan to solve the pressing problems of deteriorating economy, political instability, terrorism and growing threat of Talibanization. As the President talked about the need for national consensus, the Sindh information minister appeared before the media and condemned the President and the City Nazim. None of the Sind government's PPP ministers attended any events hosted in Musharraf’s honor either. The Sind Chief Minister Qaim Ali Shah instead chose to host a reception in honor of the Punjab Chief Minister Shahbaz Sharif on Friday in his hometown, as reported in the Pakistani media.
The growing rift between the PPP and MQM does not augur well for the city of Karachi or Sind province. Nor does it give hope for the badly needed economic recovery for the nation. Let's hope that the Sind political leadership reflects on the gravity of the current crises to rise above petty politics. The Sindh government must address the real day-to-day problems faced by all Sindhis, rural and urban.
Here's a brief video clip of the President's address: