------------------------------------------------------------------- DAWN WIRE SERVICE ------------------------------------------------------------------- Week Ending : 18 July 1998 Issue : 04/28 -------------------------------------------------------------------
Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS ===================================================================
NATIONAL NEWS Pakistan may stop paying debts: Sartaj Pakistan buys 500,000 ton wheat from US, Australia Census results being evaluated to remove lacunas Pakistan won't yield to any pressure: PM Non-bailable warrant for arrest of Benazir No intention to freeze lockers, says Nawaz UN urged to take notice of Kashmir situation SC continues hearing: Curb on power to proclaim emergency sought Split in BNP over Mengal's election Govt clarifies position: Rangers' police powers not withdrawn APTMA opposes 3pc additional GST --------------------------------- BUSINESS & ECONOMY Dollar demand down as rupee up IMF may release loans this month Rs57bn at risk in case of liquidation 5 top banks to recover Rs8bn cash in 1998 30pc cash margin on LCs push prices up 4.4-11.1pc dumping duties imposed Billions from Provident Fund eaten away HBL launches 'Crore Pati Deposit Certificates' Stocks maintain upward trend, recover 35.19 points --------------------------------------- EDITORIALS & FEATURES Riding out the storm Ardeshir Cowasjee On the brink of default Irfan Husain The crisis and its imperatives M.B. Naqvi ----------- SPORTS Zarak Jahan clinches Asian squash title Pakistan U-18 hockey team for German tour announced National athletics trials on July 25

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NATIONAL NEWS
980717
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Pakistan may stop paying debts: Sartaj
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By Our Staff Correspondent

WASHINGTON, July 16: Finance Minister Sartaj Aziz said in an 
interview published here on Thursday that Pakistan was running out 
of money and might stop paying its debts.
    
He told the Washington Times that the flow of money from lenders 
the world over had dried up since the sanctions were imposed last 
month.
    
The US State Department, however, disagrees with his claims and in 
several comments made in the last few days senior officials have 
argued that the economic situation in Pakistan was not caused by 
the impact of the sanctions but because of the government failure 
to implement the much-needed structural reforms in the past 18 
months.
    
It was not clear when the finance minister gave the interview to 
the Washington newspaper's correspondent Patrice Hill but it 
appeared from the comments that it was before his latest visit to 
Saudi Arabia and UAE where Pakistan was assured of badly needed 
help by the Arab states.
    
Mr Aziz said: "Our reserves are really low. If we don't get new 
money then obviously we are unable to pay our debt servicing. 
Pakistan's finances had been healthy before the sanctions were 
imposed. Pakistan has never defaulted on its obligations in the 
last 50 years."
    

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980717
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Pakistan buys 500,000 ton wheat from US, Australia
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Shaheen Sehbai

WASHINGTON, July 16: Pakistan purchased half a million tons of 
wheat on Thursday, 150,000 tons more than originally scheduled, as 
the US and Australian suppliers quote the lowest rates ever, 
officials here said.
    
"We decided to buy more partly to compliment the US farmers who 
worked hard to get the US sanctions removed and partly to 
capitalize on the rock bottom rates," an official told Dawn after 
the bids were awarded by the Pakistan embassy Thursday morning.
    
The US and Australian companies quoted wheat rates ranging from $99 
to $102 per ton and officials said freight rates from both US and 
Australian ports were also low, $17 per ton from the US and $12 
from Australia.
    
The US farmers got the bulk of the share of the Pakistani purchases 
300,000 tons as against 200,000 which would be shipped by the 
Australians.
    
The wheat would be shipped from the US and Australian ports from 
Aug 1-20, officials said.
    
Officials said at an average cost of about $112 per ton C&F 
Pakistan, the purchases would consume about $32m from the available 
credit of $88m under the US commodity credit scheme. The remaining 
amount of $56m would be available until October.

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980718
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Census results being evaluated to remove lacunas
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Correspondent

ISLAMABAD, July 17: The Statistics Division has directed the 
Federal Bureau of Statistics to carry out evaluation of the 
recently held population census in Pakistan to remove any lacunas 
in its operation, an official source told Dawn here on Thursday.
    
While disclosing this, the official stressed that the provisional 
results of the census announced by the finance minister were 
plausible, authentic and reflected the actual demographic changes 
that have occurred in different parts of the country in 1970s, 
1980s and 1990s.
    
The decision to undertake evaluation, therefore, did not denote 
dissatisfaction with the results of the census as announced by the 
finance minister last week, the official said. On the contrary, he 
claimed, the census was held in a more scientific manner than in 
1981, more so as the armed forces were associated with it. He did 
not see any reason why the major findings of the census should be 
different from the reality as was being alleged by certain groups.
    
Those questioning the authenticity of the results should also cite 
the reasons for their conclusions, he remarked.
    
PUNJAB: The finding that the growth rate of the population of 
Punjab was on the decline was quite plausible, he asserted. He 
cited two main reasons for this: (1) the Punjab was more affluent 
than other provinces; and, (2) its population was moving out. In 
1970s and 1980s, the emigration was directed towards Karachi; in 
1990s, it is going out of Pakistan.
    
SINDH: As regards Sindh, he said the demographic pattern in 
interior Sindh had changed in recent decades. Earlier, the 
population had tended to increase because some of the water-
intensive industries such as fertilizer were disallowed inKarachi 
and encouraged to be set up in Sindh because of greater 
availability of water there. There were two reasons for this: (1) 
waterlogging and (2) the crime wave. Many people shifted to urban 
areas where small towns turned into cities, such as Qasimabad. This 
was the main reason for the decline in population growth in 
interior Sindh.
    
KARACHI: The official also expressed surprise over the contention 
that the population of Karachi had been under-reported. In the 
first place, he said, the increase in population in that city from 
5.2 million to 9.2 million since 1981 in itself was a major change. 
And the growth rate was also fairly high: 3.45 per cent. It had, 
however, dropped from over 4 per cent. The main factor responsible 
for this was the MQM factor and the crime which registered a 
dramatic increase in the mid-1980s.
    
"Over this period, the industrial estates of Nooriabad, Lasbela, 
etc, have been in a shambles and many industries have shifted to 
the Punjab," he said.
    
The dramatic increase in Islamabad's population was also the result 
of migration from Karachi, he stressed.

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980715
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Pakistan won't yield to any pressure: PM
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Bureau Report

ISLAMABAD, July 14: Prime Minister Nawaz Sharif declared that the 
nation was fully capable of overcoming the current economic crisis 
but, he warned: "If any arm-twisting tactic was applied to 
Pakistan, the country would resist it forcefully." Presiding over a 
meeting of economic experts, bankers and leading businessmen here 
on Tuesday, the prime minister said: "We will never submit to 
coercion or pressure in any form."
    
He said the nation had an inherent potential to face challenges and 
withstand trials and tribulations, hence it was fully capable of 
overcoming the current economic crisis.
    
The PM pointed out that all attempts to exploit thepost-May 28 
developments would fail and the nation would soon tide over its 
difficulties. The present phase, he assured, was a temporary one 
and would soon be over. "Nothing is more precious than preservation 
of our political independence and territorial integrity," he added.
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980717
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Non-bailable warrant for arrest of Benazir
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Asad Ali

LAHORE, July 16: An Ehtesab Bench on Thursday issued a non- 
bailable warrant for the former prime minister Benazir Bhutto for 
July 27 and dismissed her application questioning the jurisdiction 

of the Lahore High Court to try the ehtesab (accountability) 
references filed against her.
    
The bench also dismissed her request that Justice Ihsanul Haq 
Chaudhry should not hear cases against her and that proceedings in 
her cases should be adjourned till mid-August. Notice has been 
issued to Ms Bhutto's surety.
    
The court comprising Justice Ihsanul Haq Chaudhry "partly allowed" 
an application filed by Senator Asif Ali Zardari by defreezing his 
assets which he had declared in his tax forms and before the 
election commission. But the senator has been refrained from 
alienating or parting with the assets. His application seeking 
transfer of his cases to the Sindh High Court was dismissed.
    
The court said it would take up Ms Bhutto's application against the 
freezing of her assets when she appears before it.
    
The court asked Mr Ahsan to produce the high court order on the 
basis of which the application was filed. The application mentions 
that Justice Chaudhry, in a writ petition filed in Jan 1998 by 
advocate Javed Iqbal Geoffrey, had passed an adverse order only 
against Ms Bhutto and her family although Prime Minister Nawaz 
Sharif, PTI chief Imran Khan and the former caretaker prime 
minister Moeen Qureshi were also respondents in the case.
    
The counsel, requesting again for an adjournment, said it was 
reasonable for him to believe that the bench would not assemble 
after seeing a notice signed by the reader of Justice Farrukh's 
court mentioning that the judge was on leave and the court would 
not function.
    
The court said it would look into the matter and refused the 
request for adjournment. It said the court would not be able to 
proceed with the cases if adjournments were sought in this way. It 
said the counsel should have come prepared when proceedings were 
fixed for Thursday. The case was earlier fixed for Wednesday but 
the proceedings were not held due to the death of a high court 
judge.
    
NEW REFERENCE: The Ehtesab Bench directed the special prosecutor to 
file an application giving his position about the reference he 
referred to as a "reference supplementary" to the reference no 26 
filed against Ms Bhutto and which, her counsel contended, was a new 
reference.
    
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980712
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No intention to freeze lockers, says Nawaz
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Bureau Report

ISLAMABAD, July 11: Prime Minister Nawaz Sharif declared here on 
Saturday that the government has no plan, whatsoever, to freeze 
bank lockers or demonetize the currency.
    
"This is just frivolous to imagine that we will be raiding on banks 
to freeze lockers or the rupee accounts," he added.
    
He told reporters at the PM House that there was no programme to 
freeze the lockers as was being rumoured throughout the country. "I 
do not believe in putting restrictions but some people are forcing 
me to take action against them for spreading all kinds of unfounded 
stories and rumours".
    
Similarly, he said there was no programme to demonetize the 
currency. "Why should we do so".
    
However, he defended the freezing of the FCAs and said it was 
inevitable to stop the flight of the capital. He said he had 
already told the nation on May 28 that Pakistan will have to face 
tough time for having conducted six nuclear tests.
    
The prime minister said the strong dollar would soon go down and 
the Pakistan rupee will have its right place in the market. "I 
assure you that it is a matter of few days and then you would see 
the dollar coming back to its original place," he claimed.
DOLLAR PRICE: The rupee lost 100 paisa more to the dollar in the 
open market on Saturday as the ban on selling of foreign exchange 
at the official rates kept the high demand for the green bill 
intact, adds our Karachi Staff Reporter.
    
Money changers said they were buying the US dollar at Rs59.50 and 
selling for Rs60.00 against the Friday price of Rs58.00 and 
Rs59.00. They linked the continual fall of the rupee to the ban on 
selling of official foreign exchange to overseas travellers and 
students studying abroad plus uncertain economic conditions.
    
GOLD UP:The gold prices too kept on soaring here on Saturday and 
registered a surge of Rs206 to Rs5,350 per 10 grams (24 carat) as 
against Rs 5,144 the preceding day. 

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980713
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UN urged to take notice of Kashmir situation
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By Our Correspondent

RAWALPINDI, July 12: Jammu and Kashmir Democratic Freedom Party 
(JKDFP) will stage a sit-in (dharna) in front of the United Nations 
Military Observers Group in Rawalpindi on July 13 from 10am to 12 
noon as the day will be observed as martyrs’ day throughout Jammu 
and Kashmir.
    
President of the JKDFP, Mehmood Ahmad Saghar, in a statement issued 
here on Saturday, said that the people of Jammu and Kashmir, whose 
land had been occupied by a foreign power, and whose aspirations 
for freedom were being crushed under the heel of military force, 
seeks the implementation of UN resolutions in Jammu and Kashmir.
    
Mr Saghar appealed to the UN and the world community to take an 
urgent notice of the grave situation in the held Kashmir. He 
reiterated that India could not suppress the freedom movement for 
long. Since 1947 Kashmir had been witnessing nothing but blood and 
tears, he added.
    
The JKDFP leader condemned the atrocities of the Indian forces 
perpetrated on the people of occupied Kashmir and urged the 
international human rights organisations to take cognizance of the 
deteriorating situation there.

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980716
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SC continues hearing: Curb on power to proclaim emergency sought
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Shujaat Ali Khan

LAHORE, July 15: The seven-member bench of the Supreme Court 
hearing challenges to the imposition of emergency has been 

requested to circumscribe the power to proclaim a state of siege 
under Article 232 to 237 as they militated against the basic 
framework of the Constitution  trichotomy of powers, provincial 
autonomy, fundamental rights and their enforcement by superior 
courts.
    
Appearing for the former Punjab chief minister Mian Manzoor Wattoo, 
advocate Shabbar Raza Rizvi dissociated himself from the position 
taken by advocates Shahzad Jahangir and Ikram Chaudhry that while 
there could be justification for emergency after the Indian nuclear 
blasts on May 11 and 13, it ceased to exist on May 28 when Pakistan 
evened the score and, in the words of Prime Minister Nawaz Sharif, 
"restored the strategic balance".
    
Mr Rizvi said it was not for the first time that India had exploded 
a nuclear device. The government had no valid reason to proclaim 
emergency either on or before or after May 28. When the bench 
referred to the threatening statements made by some Indian 
ministers, he said no emergency was declared when the statements 
were made and India had since offered economic cooperation.
    
The counsel referred to the press statements of the prime minister 
and his ministers, particularly the Senate leader Raja Zafarul 
Haq's declaration on the floor of the House that flight of capital 
was imminent in the wake of blasts and likely sanctions. But, he 
said, Article 232 did not provide for emergency to freeze foreign 
currency accounts.
    
The only ground on the basis of which emergency could be imposed 
under Article 232 was threat to the security of Pakistan or any of 
its parts by war or external aggression or by internal disturbance, 
he said.
    
According to the government's own admission, he added, there was no 
internal disturbance beyond the power of a provincial government to 
control even in Sindh. Similarly, there was no threat of Indian 
aggression because of the nuclear deterrence convincingly 
demonstrated by Pakistan.
    
The government, he pointed out, had failed to produce any material 
on the basis of which the emergency proclamation was issued. No 
material was shown to the members of parliament when they were 
asked to approve the proclamation and the subsequent order to 
suspend fundamental rights. The amendment to the May 28 
presidential order issued Article 233(2) by a notification on July 
13 evidenced absence of application of mind by the president, he 
stated.
    
The bench pointed out that he was relying on isolated observations 
made in newspaper reports. The court had no authentic parliamentary 
record to ascertain the reason officially given in parliament for 
the imposition of emergency. It had before it only the 
proclamation, which said that national security was threatened by 
external aggression as well as by internal disturbance.

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980716
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Split in BNP over Mengal's election
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Saleem Shahid

QUETTA, July 15: The Balochistan National Party (BNP) splits amidst 
allegation of rigging in the party polls. Six ministers and their 
supporters refused to accept the result of the party election in 
which Sardar Ataullah Mengal was elected party chief.
    
A news conference was held by Mir Israrullah Zehri, Syed Ehsan 
Shah, Mir Mohammad Ali Rind, Mir Asadullah Baloch, Prince Musa Jan 
and Abdul Ghafoor Kalmati, at the Press Club here at midnight. The 
group was led by Mohim Khan who lost election against Sardar 
Ataullah Mengal.
    
Mohim Khan claimed that the ruling BNP had given the false 
impression that he had withdrawn from the polls or not seriously 
interested in contesting. 
    
The group accused the provincial government of supporting Islamabad 
and bartering away the rights of the people of Balochistan. They 
said Islamabad had been given a blank cheque by the Balochistan 
government.
    
They blamed the government for lawlessness, breakdown in law and 
order, kidnapping, murder in broad daylight and mass unemployment. 
They ruled out that there could be a patch up. Mir Israrullah Zehri 
insisted that he would talk with the opponents within the party 
constitution and its framework. He did not rule out possibility of 
merger or forming an alliance with other political parties.
    
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980713
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Govt clarifies position: Rangers’ police powers not withdrawn
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By Raja Zulfikar

ISLAMABAD, July 12: Federal government has communicated to 
authorities in Sindh that police powers vested in Rangers to 
improve law and order situation in Karachi continue to exist and 
Rangers have consequently launched the operation.
Informed sources told Dawn that the controlling authority of the 
Rangers formally left a message here in Islamabad that they had 
begun to setup posts in various parts of Karachi and hoped they 
would be able to halt the criminal activities soon.
The Rangers were put into action after the federal government sent 
a letter on July 4 to the concerned authorities informing them that 
they should use search and arrest warrants in their attempt to 
improve the deteriorating law and order situation.
    
Sources said the July 4 letter also clarified that the powers of 
Rangers which in technical terms are called police powers, 
werenever withdrawn. The letter from the Interior Ministry in fact, 
intended to do away with the confusion that was created after the 
statements in Islamabad about the powers of Rangers.
    
“The SRO of 1995 clearly states that the Rangers can search any 
suspect and even arrest him if they think fit. And this SRO remains 
valid todate,” a senior government official said clarifying the 
position. Never were these powers, he said, withdrawn from Rangers.
    
Apart from the July 4 letter, the issue was also raised and settled 
in a meeting of the Civil Armed Forces (CAF) held at the Interior 
Ministry on Saturday.

The CAF meeting was attended by two brigadiers and three colonels 
who included the head of Rangers in Sindh. He reportedly told the 
officials of the ministry that after the letter of the federal 
government, the Rangers had initiated their operation against the 
law breakers in Karachi.
    
Sources said he also informed the meeting about the problems being 
faced in dealing with criminals and the political hurdles coming in 
the way of restoring law and order situation.
    
Sources said the CAF officials unanimously called for enforcement 
of the Army Act of 1952 in order to ensure discipline. The head of 
Rangers in Karachi reportedly said that the staff was dealt 
presently under the Civil Servants Rules under which cases against 
the staff, if any, were referred to the courts.
    
The four-hour CAF meeting also discussed in detail the incidents of 
smuggling across the borders as the head of Pakistan Coast Guards 
informed the officials of the Interior Ministry that a few more 
steps were needed to be taken to improve the situation further.
Certain lapses due to various reasons were also discussed in the 
meeting and Pakistan Coast Guards told that they should effectively 
deal with the problem in the light of the national plan of action 
devised last year to combat terrorism.

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980717
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APTMA opposes 3pc additional GST
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Reporter

KARACHI, July 16: Members of All Pakistan Textile Mills Association 
(APTMA) have threatened to close down their units if the government 
imposed additional 3 per cent General Sales Tax (GST) on yarn 
produced by spinning mills.
    
This matter came up during 8th emergent meeting of the managing 
committee of APTMA held at the association's principal office here 
on Thursday.
    
The participants were in furious mood over the issue and refused to 
make additional payment over and above 12.5 per cent GST being 
already paid by the industry on yarn.
"We are sorry to say that it seems that the government is lacking 
political will to impose 12.5 per cent GST on textile processing 
industry, including looms and sizing industry," was the popular 
opinion of the participants to the meeting.
    
The well participated meeting presided over by Chairman, APTMA, 
Jahangir Elahi, witnessed enraged moods of many members who were 
perturbed over forex crises and the way the economic issues are 
being presently handled.
    
They were also critical of the role played by the State Bank which 
issued over 40 circulars in a short span of 10 days in connection 
with the foreign currency accounts.
    

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 BUSINESS & ECONOMY
980714
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Dollar demand down as rupee up
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Reporter

LAHORE, July 13: The demand for US dollars went down here on Monday 
as the rupee gained 400 paisa dipping the open market exchange rate 
below the 60 rupee mark, dealers said.
    
At close of business on Monday, dealers said they were selling the 
dollar for Rs 58 and buying it for Rs 57. On Saturday the dollar 
was being sold for Rs 62 and bought for Rs 59.
    
A dealer at a leading moneychanger said the reason for the sharp 
increase in the kerb rate was the panic buying of people. This 
considerably pushed up the demand for dollars increasing its price 
relative to the rupee. He said now that demand had slackened the 
value of the dollar had comparatively reduced relative to the 
rupee.
The government has been saying of late that the price of the dollar 
would go down if people stopped its panic buying and this is what 
happened on Monday, the dealer said.
    
However, APP on Monday quoted the president of the Forex 
Association of Pakistan, Malik Bostan, as saying that the 
moneychangers after a meeting on Sunday with the State Bank of 
Pakistan (SBP) governor had voluntarily brought down the rate of 
the dollar in the kerb market. Bostan was also quoted as saying 
that action by the SBP against "illegal money changers" was 
expected because they were mainly involved in speculative currency 
trading.

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980718
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IMF may release loans this month
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Ihtashamul Haque

ISLAMABAD, July 17: The executive board of the International 
Monetary Fund (IMF) is likely to meet later this month in 
Washington to consider and approve the release of third and fourth 
tranches of the $1.6 billion ESAF and EFF arrangements.
    
A federal ministry official talking to Dawn claimed that Pakistan 
would not default as, according to him, the IMF would not let 
Islamabad down.
    
Official sources also claimed that Muslim countries were expected 
to extend substantial financial assistance to Pakistan to enable it 
to cope with the situation.
    
They said that PM's Gulf visit had been successful and that those 
countries were likely to help Pakistan tide over its financial 
problems.

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980712
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Rs57bn at risk in case of liquidation
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Sabihuddin Ghausi

KARACHI, July 11: As government mounts recovery operations against 
loan defaulters, on expiry of July 10, the deadline set by Prime 
Minister himself, bankers estimate 44 per cent of the due amount  
Rs 130.5 billion  will remain unrecoverable even if borrowing 
enterprises are liquidated.
    
According to the estimates worked out by 11 lending institutions, 
which include government-run banks as well as privatized banks and 
DFIs, Rs 73.5 billion would be recovered in case of liquidation of 
enterprises and Rs 57 billion will remain unrecovered.
    
This default amount of Rs 130.5 billion pertains to those loans 
which are Rs 30 million and above showing position up to end March 
this year. It includes Rs 87.4 billion principal amount and Rs 43.1 
billion mark-up.
    
This position of outstanding amount and the efforts made so far 
including cash recoveries made by banks till end May and the 
strategy to be adopted for quick recovery was discussed at the 
highest level in Islamabad on Friday.

"In the current economic emergency, draconian measures may be 
contemplated " is one of the solutions offered, as a few 
participants in Friday meeting at Islamabad observed that "default 
culture has become so deeply embedded that a shake up of both 
structures and values is long over due," a top banker confided.    
All top bankers are meeting at State Bank of Pakistan on Sunday 
(July 12) to work out a follow-up strategy of the work plan 
discussed in Friday meeting at Islamabad. Besides, the issues which 
cropped up after freezing of foreign currency accounts are on the 
agenda. The meeting will consider action to be taken against 10 top 
defaulters of each of the government-run banks and DFIs and also 
those of privatized banks and DFIs.
    
Inquiries made with banks showed that 518 cases were filed in the 
courts by these lending institutions against borrowers who obtained 
loans of Rs 30 million and more. 
    
These cases involve amount of Rs 50.6 billion against which interim 
decrees were issued in 94 cases involving Rs 11.2 billion. 
Executions application of these decrees were filed in respect of 65 
cases for recovery of Rs 7.1 billion. How much amount has been 
realized is not known. A number of bankers, however, consider poor 
liquidity of the enterprises as the main reason for failing to 
achieve success in making recoveries through legal system.
One of the many proposals being made to reactivate sick units is to 
ask government to offer remission on levies and taxes and then 
offer these enterprises to investors without asking source of their 
funds.

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980715
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5 top banks to recover Rs8bn cash in 1998
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Sabihuddin Ghausi

KARACHI, July 14: All the five top commercial banks of the country 
are set to make a total cash recovery of about Rs 8 billion in 1998 
in respect of non-performing loans estimated at Rs 125.70 billion 
in January this year.
    
This cash recovery, bankers say is part of rescheduling, write-offs 
and waiver of over Rs 45 billion unpaid loans and eventually all 
these five banks will end 1998 with a portfolio of more than Rs 143 
billion non-performing loans.
    
Under new arrangements, the board of directors of each bank has 
been authorized to deal with bad debt cases and carry out 
rescheduling which may involve write-offs, waivers and partly cash 
recovery.
    
Bankers report government-owned Habib Bank showing the highest 
amount of Rs 51.59 billion bad debts on January 1 this year. Its 
Asset Management Remedial unit is engaged in rescheduling Rs 25 
billion loans in 1998 which apart from write- offs involve cash 
recovery of Rs 3.5 billion in whole year.
    
"The bank has already recovered cash of about Rs 1.5 billion in 
respect of non-performing loans till end May and will recover Rs 2 
billion more before 1998 runs out," a senior executive of Habib 
Bank informed who claimed that the bank made cash recovery of over 
Rs 3 billion in 1997.
    
HBL's bad loan portfolio will go up beyond Rs 60 billion at the end 
of 1998 as Rs 9 billion loans are expected to become non- 
performing.
    
Declassification of loans is being mentioned as one of the main 
reasons for delay in release of HBL's annual report and balance 
sheet for the year 1997.
    
Other major nationalized commercial bank, National Bank of Pakistan 
reported Rs 31.28 billion non-performing loans on January 1 this 
year and is engaged in rescheduling of Rs 7.82 billion bad loans in 
1998. It reports cash recovery of over Rs 632 million till end May 
and has been given a target to show a total of Rs 1.5 billion cash 
recovery at the end of 1998. In 1997, NBP made cash recovery of 
over Rs 2.80 billion.
    
United Bank Limited is involved in rescheduling of Rs 8.5 billion 
in 1998 and in process is expected to make a cash recovery of Rs 
1.78 billion. Its non-performing loans portfolio will increase from 
Rs 28.8 billion early this year to Rs 31.3 billion at the end of 
1998. In 1997, UBL claimed to have made a cash recovery of Rs 3.15 
billion. Till end May this year UBL reported cash recovery of Rs 
742.64 million.
    
According to bankers, Agricultural Development Bank has been given 
the highest target of cash recovery at Rs 4.2 billion against which 
it reported recovery of Rs 1.74 billion till end May. In 1997, ADBP 
recovered Rs 3.52 billion in cash.
    
Other institutions including Industrial Development Bank of 
Pakistan is engaged in recovery of Rs 538.36 million cash, National 
Development Finance Corporation Rs 682 million, Small Business 
Finance Corporation Rs 194 million, privatized Bankers Equity Rs 
275.69 million and Pakistan Industrial Credit and Investment 
Corporation Rs 193 million.
    
Bankers say that all these 15 institutions are expected to make 
total cash recovery of Rs 14.29 billion in respect of their non-
performing loans. They have reported cash recovery of Rs 5.95 
billion till end May. In 1997, all these 15 institutions showed 
cash recovery of Rs 19.42 billion.

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980714
-------------------------------------------------------------------
30pc cash margin on LCs push prices up
-------------------------------------------------------------------
Sabihuddin Ghausi

KARACHI, July 13: Forward trading in a number of commodities 
witnessed on Monday, an accelerated rising trend following State 
Bank of Pakistan's decision a day before, demanding 30 per cent 
cash margin from importers on opening letters of credits in the 
banks.
    
Traders say that 25 kilogram of milk powder bag was being quoted at 
Rs175 and tea a premium of Rs20 per kilo and similarly a large 
variety of consumer items including spices and dry fruits are 
showing trends of upswing following the 30 per cent margin on 
imports.
    
"I opened a letter of credit for tea for Rs48.15 a dollar in a bank 
for 30 days shipment", a leading tea importer of Jodia Bazar said 
who pointed out that banks were demanding a premium of Rs1.65 on a 
dollar above the official parity rate of dollar for opening letters 
of credit. Bankers however justify this excess charging on the 
plea, as one senior banker incharge of foreign exchange explained, 
"foreign exchange market is volatile and no one knows at what price 
dollar would be pegged when shipment is made and documents are 
received by the bank".
    
Bankers and traders agree that State Bank has imposed condition of 
30 per cent margin to discourage imports but fear that it has set 
in motion a fresh wave of inflation that would hit domestic market 
sometimes next month.
    
Also to be hit by this condition would be the local manufacturers 
involve in production of detergent soaps, toothpaste, cosmetic 
items and all those goods in which substantial inputs are imported.
    
There is also a looming fear of a fresh devaluation by the 
government being estimated conservatively at around 10 to 12 per 
cent by the bankers and up to 15 to 20 per cent by the traders.
    
"Devaluation has become imminent as gap between official parity 
rate and kerb rate in market is anywhere up to 25 to 30 per cent", 
a well known tea trader of Jodia Bazar explained.
    
He said the difference between two rates is such that overseas 
Pakistanis who have been offered generous incentives and 
concessions on import on their transfer of foreign exchange to 
Pakistan are not availing it.
    
Top bankers in the city claiming to have close contacts with 
decision makers in Islamabad endorse the views of devaluation has 
now become inevitable. They however, contend that government will 
have to think a lot before going this way.
    
"A rupee rise in dollar value means addition of Rs4 to Rs5 billion 
on debt servicing cost on budget", a well placed banker explained. 
"Debt servicing even at present level in the budget has become 
unsustainable and a further rise of 10 to 12 per cent will unleash 
unmanageable inflationary pressures", he said.
    
According to bankers the government will take course of devaluation 
only after persuading the international lenders to reschedule the 
loans repayment and provide some relief in servicing of these debts 
for next few years.

"Pakistan's economic fundamentals are sound and a respite of few 
years from debt servicing burden will make the economy buoyant and 
generate enough capacity to meet all obligations with grace and 
dignity", the banker said.

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980717
-------------------------------------------------------------------
4.4-11.1pc dumping duties imposed
-------------------------------------------------------------------
Pervaiz Ishfaque Rana

KARACHI, July 16: The European Commission (EC) on Tuesday imposed 
definitive anti-dumping duties on imports of unbleached cotton 
fabrics (UCF) from Pakistan and four other Asian countries.

According to a message received here on Wednesday, from Brussels, 
headquarter of EC, duties ranging between 10 to 18 per cent, will 
be imposed immediately on unbleached cotton fabrics (UFC) exports 
from China, India, Pakistan, Egypt and Indonesia.
    
The definitive duties being imposed are as follows: India 4.1% to 
16.1%; Pakistan 4.4% to 11.1%; Indonesia 11.8% to 13.7%; China 
10.9% and Egypt 18.5%.
    
Duty margins for Pakistani exporters, who cooperated with the 
Commission during the investigation, has been fixed at 10.1 per 
cent and for non-cooperating 11.1 per cent. Similarly, for India 
the duty rate has been fixed at 12.8 per cent for cooperating and 
16.1 per cent for non-cooperating exporters/companies.
    
Under EC regulations these countries can submit their rebuttals by 
July 24, and could also ask for hearing their viewpoint against the 
definitive measures taken by the Commission.
    
The affected countries under these regulations could also offer 
undertakings for which Pakistan has already informed the Commission 
of its willingness to sign such an undertaking whereas other 
countries may offer undertakings upon receipt of the disclosure.
    
The Commission, earlier this year, slapped much higher provisional 
anti-dumping fines on imports of unbleached cotton fabrics from the 
five Asian countries, including Turkey.
    
Subsequent to the imposition of provisional anti-dumping duties on 
March 25, 1998, these countries were asked to submit their rebuttal 
so that the Commission could know their views on the provisional 
findings.
    
The provisional fines were imposed following an inquiry initiated 
by the Commission on July 10, 1997, showing that all six countries 
are 'dumping' their goods on European market causing 'material 
injury' to their textile industry.

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980716
-------------------------------------------------------------------
Billions from Provident Fund eaten away
-------------------------------------------------------------------
Muhammad Ilyas

ISLAMABAD, July 15: The government has eaten away billions of 
rupees by arbitrarily deducting thousands of rupees from the 
General Provident Fund accumulations of each of its employee.
    
Not only the employees of federal ministries but also of autonomous 
corporations found, to their great shock, on receiving pay slips 
for the month of June, 1998, issued by the Accountant General 
(Pakistan) Revenues that they were poorer by huge amounts out of 
their hard-earned savings.
    
'This is the second time the Government has breached the people's 
trust after having frozen the foreign currency accounts which it 
had repeatedly declared inviolable,' remarked an officer who is on 
the verge of retirement and had already made a deal for purchase of 
a small house for himself. 'How will I make up the difference 
between the contract and the money now available after the 
unexpected deduction in my G.P.F. account?' he wondered.
    
The inviolability of provident fund is a principle steeped in long 
tradition as well as rules. No institution or individual, howsoever 
powerful, not even a court of a law  has been given the authority 
to forfeit an employee's G.P. Fund or even deprive him/her of a 
fraction of it on any ground whatsoever, a number of veteran 
government employees well-versed in rules observed.
    
So far, private companies were embezzling provident fund deposits 
of their employees and now the government too has stepped into 
their shoes, they observed.
In fact, many employees would not have even noticed the difference 
between the sum mentioned in the pay slips of May and June, had 
some of the employees not been particularly interested in knowing 
how much they would get after retirement.
    
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980716
-------------------------------------------------------------------
HBL launches 'Crore Pati Deposit Certificates'
-------------------------------------------------------------------
Reporter

LAHORE, July 15: Habib Bank Limited on Wednesday introduced 'Crore 
Pati Deposit Certificates' to enhance its liquidity position and 
check foreign currency flight abroad. 
    
Launching the new venture HBL Executive Senior Vice President, 
Anique Khawar told a news conference that the bank felt that the 
existing facilities to encourage public savings were inadequate and 
some thing more lucrative had to be offered to the general public 
to boost savings. The new certificates, he said, would go a long 
way in boosting the saving rate in the country. 
    
The CPDCs are issued for 6 months, and one year at 10 per cent 
profit. The profit is paid half yearly. The certificate holders can 
win prizes from the lucky draws held every month with cash prizes 
from Rs100,000 to Rs 10,000. One grand lucky draw will be held 
quarterly offering prizes worth Rs10 million. 
     
Khawar told reporters that after freezing of the foreign currency 
accounts and loss of confidence by account holders in these 
accounts there had been a threat of funds flight from the banking 
system. 
    
"It is the time banks devise schemes which restore depositors 
confidence and at the same time improve the low savings rate", 
Khawar told a questioner. The certificates cannot be encashed 
before 3 months of the date of their purchase and if encashed 
within 6 months, no profit will be given to the holder. Profit on 
the certificates is subject to Zakat and income tax deductions.

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980718
-------------------------------------------------------------------
Stocks maintain upward trend, recover 35.19 points
-------------------------------------------------------------------
Reporter

KARACHI, July 17: The recovery operation was well-sustained on the 
stock market on Friday as investors were not inclined to take a 
technical breather and made fresh massive short-covering in the 
pivotals at the attractively lower levels.
    
The KSE 100-share index posted a fresh gain of 35.19 points at 
882.95 as compared to 847.75 a day earlier.
    
The index is virtually racing to attain its base level of 1,000 
points, breached for the first time in the trading history of the 

Karachi Stock Exchange, and could take a pause after hitting it, 
analysts said.
    
It has recovered over 100 points or 15 per cent during the last 
three sessions and there are reasons to believe that it could 
attain it possibly by the next week, they added.
    
"Investor optimism is apparently based on the perception that 
leading Gulf countries have indicated to bail-out Pakistan from the 
prevailing financial crisis including a possible default," said a 
member of the Karachi Stock Exchange.
    
The waiver received by President Clinton from the Senate to show a 
measure of flexibility in regard to economic sanctions on Pakistan 
and India was also considered a positive development, he added.
    
He stated that what surprised most analysts was the strong presence 
of some foreign funds who had withdrawn to sidelines after the 
recent financial mess and turmoil on the money markets including 
run on dollar and gold.
    
An idea of market's upward drive may well be had from the fact that 
it did not react bearishly to the meeting of nationalists parties 
and their willingness to protect the interests of Sindh, said a 
floor broker.
    
He said the index has recovered more than 100 points during the 
last three sessions and there are reasons to believe that 
recessionary cycle has run its course.
Bulk of the short-covering operations were, however, centred around 
low-priced bank, energy and chemical shares, which took the entire 
market along with them in the plus column.
    
News that Hub Power has cleared its debt, both foreign and local, 
totalling Rs 4.5 billion, including Rs 2.13 billion foreign, 
continued to inspire strong buying at the lower levels. It finished 
with an extended gain of 90 paisa.
Lever Brothers and Shell Pakistan showed fresh gains ranging from 
Rs 15.10 and Rs 7 at Rs 715.10 and Rs 157. Other good gainers were 
led by PSO, Pakistan Refinery, Adamjee Insurance, Engro Chemical, 
Fauji Fertilizer, which posted gains ranging from Rs 1.25 to Rs 7, 
biggest rise being in Shell.
    
Al-Ghazi Tractors, Faisal Spinning, Cherat Cement and Ibrahim 
Modaraba were among the prominent losers, falling by one rupee to 
Rs 8.85.
    
The largest decline was noted in Faisal Spinning which was quoted 
on spot basis apparently in a bid to forestall further fall in its 
share value. Trading volume fell to 82 million shares from the 
previous 109 million shares owing to the absence of leading 
sellers. Gainers maintained a strong lead over the losers at 51 to 
22 with 39 shares remaining unchanged at the last levels.
    
PTCL topped the list of most actives, up Rs 1.10 at Rs 18.70 on 39 
million shares, followed by Hub-Power, higher 90 paisa at Rs 11.65 
on 36 million shares, ICI Pakistan, firm 50 paisa at Rs 12.85 on 
2.026 million shares, FFC-Jordan Fertilizer, higher 30 paisa at Rs 
14.20 on one million shares, and Sui Northern Gas, up 50 paisa at 
Rs 8.75 on 0.599 million shares.
    
Other actively traded shares were led by D.G.Khan Cement, up 35 
paisa on 0.428 million shares, MCB, firm 30 paisa on 0.369 million 
shares, Sui Southern, steady 10 paisa on 0.274 million shares, PSO, 

up Rs 6.25 on 0.281 million shares, and Dhan Fibre, easy 15 paisa 
on 0.245 million shares.
    
DEFAULTING COMPANIES: Tariq Cotton came in for active selling and 
was marked down by 50 paisa on 0.100 million shares but on the 
other hand Suzuki Motors attracted good support at the lower level 
and recovered 25 paisa on 6,000 shares. Mian Textiles fell 25 paisa 
with 1,000 shares changing hands.

Back to the top
=================================================================== 
 EDITORIALS & FEATURES
980712
-------------------------------------------------------------------
Riding out the storm
-------------------------------------------------------------------
Ardeshir Cowasjee

"HOODLUM: The name originated in San Francisco about 1870-72 and 
began to excite attention elsewhere in the US about 1877." Hoodlums 
are street-rowdies, dangerous roughs. Now, 127 years down the line, 
this nineteenth prime minister of Pakistan, Mian Mohammad Nawaz 
Sharif, has added another dimension to the meaning of the word.
    
In late November 1997, all bundled together in the person of our 
prime minister were desperation, fear of being convicted, of being 
shunted into oblivion, of being declared bankrupt, greed for more 
power and more pelf, lack of respect for law and for the sanctity 
of the courts, over-confidence, stupidity, and ineptitude. With aid 
and support from his equally endowed ministers, parliamentarians 
and hangers-on, Nawaz Sharif was spurred on to defend him-self by 
perverting the course of justice.
    
On December 15, 1997, the newly sworn-in Chief Justice of Pakistan, 
Ajmal Mian, trod cautiously and appointed Abdur Rahman Khan, J-10 
of his court, to hold an inquiry into the matter of rowdyism and 
violence in the Supreme Court premises on November 28, 1997, and 
"to suggest what steps/action the Supreme Court should 
take/initiate in the above matter to avoid such incidents in the 
future." Justice Khan was given a difficult job. 
Those who could help his inquiry, the authorities and their 
minions, were in fact themselves the aiders and abettors.
    
In his report delivered to the Chief Justice on February 18, 
Justice Khan wrote: "As the action of those individuals who forced 
their way into the court premises and raised slogans against the 
judiciary, prima facie, amounts to gross contempt of this court," 
and he recommended that the Chief Justice constitute a Bench to 
initiate contempt proceedings for "the outrageous incident."
    
The court should identify the stormers, and "once the concerned 
persons are identified, the court can then issue notices to them 
and then take further action under Article 204 of the Constitution 
and the applicable law." The necessity for initiating immediate 
action was stressed, the matter being of "paramount importance," as 
"the sanctity, dignity and respect of the apex court of the country 
is involved. Street power should not be allowed to coerce and 
intimidate the judiciary."
    
And so, within a week, on February 25, the CJ constituted the Bench 
to be presided over by Nasir Aslam Zahid, J-5, the former Chief 
Justice of the Sindh High Court, sitting with Munawar Ahmed Mirza, 
J-6, the former Chief Justice of the Balochistan High Court, and 
Abdur Rehman Khan, J-10, the former Chief Justice of the Peshawar 
High Court ( who had held the first inquiry ) to delve deeper into 
the matter. 
    
The three sat in the original jurisdiction in the Supreme Court in 
the matter of Criminal Miscellaneous No.27/98. They met 27 times. 
They saw, heard, read, and they examined 53 witnesses under oath. 
They rode out the storm and delivered.
    
By its order of July 3, the Bench held the following, all members 
of the Pakistan Muslim League, prima facie guilty of gross contempt 
of the Supreme Court, of the violation of the applicable law, and 
of being involved in, or aiding and abetting, or facilitating the 
storming of the Supreme Court.
    
PML MNAs: Tariq Aziz ; Mian Mohammad Munir.
    
PML MPAs: Chaudhry Tanvir Ahmad Khan ; Akhtar Rasool ; Sardar 
Mohammad Naseem Khan.
    
Prime Minister's political secretary: Mushtaq Tahirkheli (sacked 
one day, reinstated the next day, rewarded).
    
PML office-bearers, activists, rabble-rousers, street-fighters: 
Shahbaz Ghousi (commander of the Nawaz Sharif Force); Akhtar 
Mahmood, (roadrider of Rawalpindi); Babar Awan (divisional 
president of the Muslim Students Federation); Ali Abbas (general 
secretary of the PML Labour Force, Rawalpindi); Anjum Iqbal ( 
roadrider of Rawalpindi); Mohammad Faruq (divisional secretary of 
the PML Youth Force of Rawalpindi); Mohammad Naseem (Joint 
Secretary, PML MSF Labour Force of Rawalpindi); Tanvir Akhtar 
(general secretary, PML Youth Force of Rawalpindi); Raja Zafar 
Iqbal (joint secretary, PML Labour Force of Rawalpindi); Malik 
Mohammad Munawar (general secretary of the PML, Rawalpindi).
    
*From Babar Awan downwards, all had been accused in Criminal Case 
No. 229/97 filed at the Secretariat Police Station, Islamabad, 
after the storming of the Supreme Court. They were jailed, 
released, garlanded, and rewarded.
    
Held to be prima facie guilty of aiding, abetting or facilitating 
the storming:
    
Members of the administration: Abid Ali, Acting DC, Islamabad; 
Mohammad Ali, AC, Islamabad; Iftikhar Ali Shalwani, AC, Islamabad.
    
Members of the police force: Tariq Saleem Lone, IGP Islamabad; 
Altaf Hussain, SSP, Islamabad; Bashir Ahmad Naseer, ASP, Islamabad; 
Liaquat Ali, DSP; Mohammad Ashiq Farooqui, DSP; Inspector Jamil 
Hashmi; SHO, Secretariat PS; Inspector Mussarat Hussain Khan, SHO, 
Bharakau PS.
    
The Court has directed that show-cause notices be issued to the 
above 26 persons, calling upon them to explain why action should 
not be taken against them for contempt of the Supreme Court. It has 
established that the storming was premeditated, that a large number 
of people had been brought in for the purpose from areas outside 
Islamabad, that the flak-jacketed police force present and on duty 
at the Supreme Court was sufficiently adequate to deal with the 
situation and to prevent the storming, and that had the doors of 
Chief Justice Sajjad Ali Shah's Court No. 1 not been closed, it 
would have been invaded by the hoodlums and the Chief Justice and 
his brother judges then in session would have been physically 
molested.
    
It has been found that there was no impediment whatsoever in the 
way of the police that restrained them from controlling the 
invading hoodlums and from taking whatever action they should have 
taken. The conclusion is that they im-pliedly facilitated the entry 
of the stormers into the premises and building of the Supreme Court 
of Pakistan.
    
The video cassette showing the recording of the televised broadcast 
by the BBC of the events of that November day, and of the CCTV 
cameras installed in the Supreme Court building, provided 
unassailable evidence, as did the photographs taken by the press 
photographers. 

Credit must go to the unknown man (or woman) who one day deposited 
at my house the cassette in question which I forwarded to the 
succeeding Chief Justice Ajmal Mian with the request that he view 
it.
    
Much credit must also go to senior journalists, Mehmud Ali of the 
Business Recorder and Zahid Husain of AP, The Times and Newsline, 
to journalists Altaf Hussain Bhatti, Aslam Butt, Abdul Wadood 
Qureshi, Naveed Meraj and Fakhr-ur-Rahman (the man who ran into 
Chief Justice Sajjad Ali Shah's Court No.1 to warn the judges of 
the impending invasion and who, for his timely action in thwarting 
their plans, was beaten up in the court room after the judges had 
risen, by the PML hoodlums).
    
Credit also to Hussain Haqqani, journalist, media-man and former 
member of both the Muslim League and the PPP governments, former 
Spin Doctor of both Prime Ministers Benazir Bhutto and Nawaz 
Sharif, who did much behind the scenes to give courage to those 
wary of speaking and who himself came forward to tell the court 
what he knew.

Of the 53 whose evidence was recorded under oath, the only 
politician whose testimony supports the findings of the inquiry 
Bench is that likeable Senator, Iqbal 'Groovy' Haider. He at least 
had the grace to tell the truth. The other politicians who 
testified, without exception, could easily be convicted of perjury.
    
The presiding judge, Nasir Aslam Zahid, had an excruciatingly 
difficult task. He needed a unanimous order. The pressure on him 
and his brethren was heavy, the constraints under which they worked 
were known to us all but cannot, under the prevailing 
circumstances, be repeated prudently in print. We are now 
unprotected. The declaration of the unnecessary 'Emergency' has 
deprived us of our fundamental rights.
    
So far, the storm has been well ridden. The first and second steps 
have been taken, without a stumble. The judiciary has helped 
itself, it has helped the people, who, to some extent, have 
regained confidence in the institution upon which they must rely.

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980718
-------------------------------------------------------------------
On the brink of default
-------------------------------------------------------------------
Irfan Husain

ALTHOUGH the rupee's free fall against the dollar has halted for 
the time being, Pakistan's economic woes haven't gone away.
    
Indeed, our leaders' attitude towards the unfolding scenario 
reminds me of the man who fell off the top of a skyscraper. As he 
hurtled past the tenth floor, he said: "So far, so good!"
    
Just the other day, the prime minister chaired a meeting in 
Islamabad in order to come up with a contingency plan to deal with 
the present crisis. Now the purpose of such a plan in any rational 
dispensation is to have it ready before an emergency. In our case, 
we have allowed ourselves to be sucked into a crisis, and are now 
trying to stumble out. But as is true for most traps, it is much 
easier to fall into one than to get out. And unfortunately, Nawaz 
Sharif and his associates have neither the credibility nor the 
ability to lead us out of the mess they have created.
    
As Pakistan teeters on the brink of default, we have to face the 
fact that the problem was brewing much earlier than the nuclear 
tests and the resultant sanctions. Decades of living beyond our 
means have brought us to this present pass: year after year, a 
succession of governments have spent more than the revenue they 
collected, and imported more than we exported. To make ends meet, 
we have borrowed heavily from internal and external sources. Now we 
can no longer service our external loans.
    
What are the consequences of the impending default? First and 
foremost, nobody will lend us a penny unless it is at exorbitant 
interest rates. No foreign exporter will accept letters of credit 
from our banks, and will demand cash up front. The rupee will 
collapse against the dollar, and inflation will ravage what is left 
of the economy. Essential imports will be slow to a trickle, and 
industry will come to a grinding halt for want of spare parts and 
raw material. The stock market, already at its lowest ever level, 
can no longer be considered a vehicle for capital formation: any 
new offering in the foreseeable future is doomed to sink without a 
trace.
    
When faced with this doomsday scenario, the most our leaders have 
been able to come up with is a National Self-Reliance Fund to which 
only a handful of people have contributed a pittance. After being 
stung by this government on a number of occasions, people just 
don't have any confidence in it. From the cooperative banks scam to 
the Yellow Cab scheme, and from the Qarz Utaro Mulk Sanwaro scheme 
to the recent Great Bank Robbery which saw private accounts worth 
billions of dollars frozen, the ruling party and its foot soldiers 
have taken ordinary people for one ride after another.
    
Instead of a measured response, policy-makers have been flapping 
about the countryside like chickens with their heads cut off. 
Hardly a day has passed since the nuclear tests that the State Bank 
has not come out with yet another circular, usually contradicting 
an earlier one. But despite all their contortions, neither the 
finance ministry nor the State Bank has been able to explain what 
has happened to the ten billion dollars individuals and 
corporations had deposited in banks. We know that our foreign 
exchange reserves are now down to $800 million, so where did the 
other nine billion dollars go?

Grim economic realities apart, one reason nobody trusts this 
government and the banking system any more is the way cronies of 
the kitchen cabinet had sent hundreds of millions of dollars abroad 
before foreign exchange accounts were officially frozen. Pakistanis 
here and abroad are understandably bitter over the fact that some 
fat cats were deliberately allowed to make a killing, while 
ordinary people's savings were eroded overnight. Imagine the plight 
of young men and women studying abroad: suddenly the cost of their 
education has jumped up by nearly a third. And this is just for 
starters. Wait until the sanctions really start to bite.
    
Had the average IQ level of the ruling party been in triple digits, 
they could have foreseen much of what is happening today. Before 
pushing the nuclear button, a cost-benefit analysis could have been 
worked out by an undergraduate student of economics.
Apart from the initial rush of testosterone, what have we gained by 
testing? Certainly we have not enhanced our security; indeed, it 
can be argued that by detonating what was probably a significant 
part of our nuclear arsenal, we may have actually lowered our 
defences. In the medium term, we have weakened our conventional 
forces by making imported spares and equipment more expensive 
through a falling rupee. Instead of isolating India and cashing in 
financially and diplomatically by occupying the moral high ground 
through refraining from following our bellicose neighbour's 
example, we have lost the advantage we could have gained.
    
Even after testing, if we had immediately announced that we would 
sign the CTBT unilaterally, we might have escaped the squeeze we 
are caught in now. Our current standing in the international 
community can be gauged by the extremely tough and undiplomatic 
(but accurate) language used by the US State Department's assistant 
secretary in describing this government's mishandling of the 
economy.
    
In most countries, at the very least the finance minister would 
have resigned after presiding over a disaster of such magnitude. 
Here, the articulate but ineffectual Sartaj Aziz brings us messages 
of hope from different capitals, but precious few hard commitments. 
I understand that when the cabinet was debating whether to test or 
not, he was among the most strident of hawks. To mix avian 
metaphors, now that the chickens have come home to roost, will he 
have the grace and sense of timing to step down? I doubt it very 
much.
    
And our foreign minister is still clinging on despite having handed 
in his resignation a couple of months ago. Had he left then, we 
would have been spared his bizarre statements and analyses. His 
priceless assessment that we would "win" a nuclear exchange with 
India because our adversary's population was concentrated while 
ours is dispersed deserves to be framed and displayed in the 
National Defence College. Perhaps he forgot that Karachi has a 
population of ten million, and Lahore has over five million people.
    
But the deed was done over six weeks ago, and we have to live with 
the consequences of the follies of our leaders. But for how long, 
oh Lord, for how long?

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980716
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The crisis and its imperatives
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M.B. Naqvi
    
PRIME MINISTER Nawaz Sharif and his government must have come to 
two conclusions. The crisis that is engulfing the country has not 
been caused by nuclear tests alone and that there is no single 
cause for it  except that the country has been consuming far more 
than it produces and no one has thought of correcting this 
imbalance. 
   
All the mistakes committed in the past are now to be paid for. 
Secondly, it is an altogether complex situation; there is no quick-
fix solution for it. So long as simplistic solutions continue to be 
sought, the crisis will only become worse. It can even get out of 
hand.
    
Talking of quick fixes, two highly unrealistic options are being 
suggested. One is to surrender and offer to sign the NPT, CTBT and 
all other instruments of a non-proliferation regime 
unconditionally. If Pakistan does that no quid pro quo will be 
forthcoming. The paid price will inevitably include doing without a 
proactive Kashmir policy. After these prices have been paid, the 
country will be required to go on bended knees before Washington  
in which case it may get a bail-out. The bonanza might include 
restructuring of the loans, perhaps even a scaling down of them and 
certainly rescheduling of debt servicing for a spell of 3 to 5 
years during which to get our act together. It may also include 
some IMF and World Bank loans. But Pakistan is unlikely to 
surrender like this, nor does US administration appear to be in a 
mood to bail it out.
    
The second theoretical option is for Prime Minister Nawaz Sharif to 
find a patron saint who will give us a loan of $15 to 20 billion 
for 7 to 10 years during which it will not charge any interest nor 
ask for repayment. With the help of this monetary reserve Islamabad 
would try to discharge its current liabilities in the next two to 
three years and regain confidence gradually after the initial 
damage control and corrective steps. But this kind of loan giver is 
hard to find. Prime Minister Nawaz Sharif did not seem to get even 
petroleum and edible oils on deferred payments or some ad hoc 
amounts to be kept with SBP from Arab brethren. No one seems to 
have enough money these days. 
    
So what remains? The first illusion is that we have to be bailed 
out. No body is likely to do that for us. We have to bail ourselves 
out. Nobody owes us either our survival or prosperity or a 
reasonable consumption level. We have to develop and defend the 
country ourselves with our own resources. Others' help for 
development might be forthcoming but at a later stage. That stage 
will come after we have initiated the process of true development. 
If the process looks promising, along with the emergence of a 
market of some size with a certain level of purchasing power and a 
potential for growth, at that point others with lots of money might 
want to join in. they will make investments for the sake of making 
profits. The precise policy package we give them is of secondary 
importance. If the potential for profits looks good and certain, 
investors will try to overcome all the difficulties that 
bureaucracy may place in their way.

All this talk of red tape hindering foreign investment is 
exaggerated. If the country looks attractive, entrepreneurs and 
investors would gate-crash and overcome all hurdles. Only the 
prospects of profits should be attractive enough. But we cannot 
bank on foreign investors. We have to start the process of growth a 
new from scratch, treating the present crisis as the end of a 
chapter. The first task may be to encourage capital formation among 
the business class (and not feudals), as too much capital may have 
gone out of the country.
    
The government should facilitate investment without any spoon- 
feeding or too many incentives or concessions. Nascent industries 
sometimes need protection. But that has to be limited and should 
progressively diminish. We have to know how to plan an economy that 
does not violate market principles altogether, even when we intend 
diverging from the present paradigm of deregulation, privatization, 
free trade and liberalization. We have just seen what 
liberalization has done to our economy when other fundamentals were 
not sound.
    
One question has not been discussed but is obvious. The kind of 
things that Mr Sartaj Aziz has done since May 28 last had no chance 
and indeed might blight the future. Given the present structure of 
the economy, together with the policy package Pakistan adopted, 
there is no likelihood of success. A wholesale restructuring of 
economic policies as well as the very structure and orientation of 
the economy is necessary. Even mian Nawaz Sharif and Mr Sartaj Aziz 
have indicated that they have been forced into considering the 
option of unilateral moratorium on debt servicing and to restrict 
imports. This would violate all IMF rules and will simply be seen 
as ad hoc policies that have been pursued since May last.
Taken in isolation, these initiatives too may fail to deliver 
anything worthwhile. It will amount to going into a shell similar 
to North Korea's or Burma's and shut off Pakistan altogether from 
world markets. It can then only rely on barter or some version of 
it. It would be unrealistic to expect substantial inflows except 
from the captive expatriates who happen to have no option but to 
remit money through the hawala channel. Can the government make a 
success of this sort of economy?
    
In order to succeed in such an isolationist venture, the present 
hoard of dollars and Pakistan rupees that the rich sections have 
amassed will have to be rendered ineffective or brought out into 
the formal economy. Demonetization will be an imperative. If the 
fight against inflation is taken in hand with some determination, 
demonetizations is again unavoidable. Whether a whole new economy 
that does not violate the basic market principles and yet retains 
socially egalitarian purposes is certainly a tall order and yet 
real serious efforts have to be directed to that end without any 
loss of time.
    
Again it is worth repeating there are no quick fixes for the ailing 
and enfeebled economy. The only option one thinks is feasible is 
that we do three or four things together, some of which have proved 
unrealistic so far. Pakistan economy today should, for all 
practical purposes, be seen as a boat that is sinking. Needles 
ballast and other heavy cargoes have to be thrown overboard. It 
means restricting public consumption to bare minimum. The primary 
ballast that has to be shed is debt servicing. Unilaterally or 
through negotiations, it has to be done, though ideally it should 
be an agreed decision with at least IMF and the World Bank. 
Likewise, the heavy spending on national security should be 
slashed. Nothing counts in comparison with the goal of survival. 
Even Kashmir or nuclear deterrence is secondary compared to the 
challenge of the nation's economic and political survival.
Next, the charade that goes by the name of development has to be 
ended. But to begin with, the existing vital industrial projects 
that have a potential for growth and are of vital importance must 
survive whether they remain in the public sector or pass into 
private hands. But they should not require imported raw material 
unless they be oil refineries and the like or direct imports of 
vital commodities like foodstuffs, tea, petroleum and similar 
commodities. All industries that require more imports than their 
exports can pay for do not deserve to survive. They are a 
deadweight and have to be closed down. What are vital for popular 
consumption or for more agricultural and industrial production 
should be not only retained but also strengthened and expanded. We 
should aggressively carry out a three- or four- year stabilisation 
programme.
    
A important point is Pakistan should stop looking for guarantees 
for national security. For it to expect that the someone can help 
us in getting Kashmir out of the Indian clutches is inherently 
unsound. The rest of the world will not force India into handing 
over Kashmir to Pakistan. The maximum that can ever be visualized 
is India being forced to listen to what the Kashmiris say and say 
unmistakably and unitedly. But the idea that someone can take 
Kashmir out of Indian military hold for Pakistan is flawed.
    
These limitations should determine policy for Islamabad if it wants 
to ride out the growing crisis. One has not dealt with the purely 
political prerequisites of a policy of survival. But these are 
crucially important: all sanctions and opinions have to be listened 
to and carried along. 


===================================================================
SPORTS
980715
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Zarak Jahan clinches Asian squash title
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KUALA LUMPUR, July 14: Top seed Zarak Jahan Khan of Pakistan 
recovered to clinch the Asian squash title by three games to one 
against the Malaysian second seed, Kenneth Low, in the final here 
on Tuesday.
    
Zarak, who won the Asian title in 1994 here, lost the opening game 
5-9 but clinched the match by taking the next three games in a row 
9-6, 9-1, 9-1 against the young Malaysian.
    
In the all-Malaysian women's final, Nicol Ann David also dropped a 
game before overcoming her compatriot Sandra Wu 9-2, 4-9, 9-6, 9-
1.Agencies

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980717
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Pakistan U-18 hockey team for German tour announced
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Reporter

LAHORE, July 16: An 18-member Pakistan under-18 hockey  team was 
announced here on Thursday after the conclusion of two-day trials 
at the National Hockey Stadium.
    
The team is scheduled to leave for Lipzip on July 29 to play a 
five-match international series against the German junior side and 
return home on Aug 5.
    
Syed Sameer of Pakistan Customs has been named to captain the team.
    
Addressing a press conference at conclusion of a 75-minute meeting 
of the national selection committee at the PHF headquarters, PHF 
Secretary Col (retd) Syed Mudassar Asghar said  that the team had 
been chosen unanimously.
    
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980717
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National athletics trials on July 25
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Reporter

ISLAMABAD,  July  16: Open trials to pick four-member Pakistan 
track and field team for participation in XVI Commonwealth Games 
will be held here on July 25 at Jinnah Stadium, Pakistan Sports 
Complex.
    
The trials would start at 5.50 pm. Entries can be sent to Pakistan 
Amateur Athletics Federation (PAAF), Jinnah Stadium, Islamabad.
    
After the trials the top winners would be selected in each 
discipline. Khalid Mehmood, Sports Officer, WAPDA, has been named 
manager of athletics squad for the C' Wealth Games to be held  in 
Kuala Lumpur from Sept 11.

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