------------------------------------------------------------------- DAWN WIRE SERVICE ------------------------------------------------------------------- Week Ending : 9 June 2001 Issue : 07/23 -------------------------------------------------------------------
Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS ===================================================================
NATIONAL NEWS + Search for arms in Jihadi, Afghan DPs camps also + Planning body opposes two-tier power tariff + NEPRA chief concerned over load-verification plan + Pakistan, Italy to boost defence cooperation + National Economic Council okays major uplift projects + Benazir flays India for inviting Musharraf + Irresponsible leaders harming country + WAPDA seeks hike in power tariff: Line losses claim disowned + Vajpayee welcomes Musharraf's remarks + CE asked to meet APHC leaders before India visit + Structural changes aim at self-reliance: Shaukat + Washington to discuss National Missile Defence issue + Strong Nepal vital for peace: CE + CE's visit will settle Kashmir dispute: Vajpayee optimistic + House raids in arms drive likely: Moin + 17 fighters killed in Valley + Rs 15 billion cash flow package for WAPDA in doubt + CE tells army to start RBOD project work estimated at Rs16bn + 'Arms drive to continue till meeting of target' + Benazir, Asif facing eight corruption cases, says NAB --------------------------------- BUSINESS & ECONOMY + Big discounting in money market: Rupee down by 25 paisa + Budget to put economy back on track + Country likely to earn $9.16 billion in exports + Rupee up 1% in inter-bank market + State Bank hikes discount rate by 1%: Rupee recovers 2 per cent + Rs 130 billion Public Sector Development Programme envisaged + Planning body finalizes proposals: Budget 2001-02 + Rupee still on decline: $ at Rs 67 in kerb + A chance to break away from zero sum game + Pakistan's haemorrhaging state + Package for investors on cards: Budget 2001-02 + 29.4% growth in ST collection noted --------------------------------------- EDITORIALS & FEATURES + Forty-five days' liberty lost Ardeshir Cowasjee + Educating the warriors Ayaz Amir + The short arm of the law Irfan Husain ----------- SPORTS + Pitch invasion mars Pakistan's victory + Pakistan beat England by 108 runs + Rejuvenated Pakistan face England in tri-series opener today + Pakistan level series + Exciting final day on cards at Old Trafford + Manchester Test delicately poised

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NATIONAL NEWS
20010609
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Search for arms in Jihadi, Afghan DPs camps also
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Staff Reporter

ISLAMABAD, June 8: The campaign to recover illicit arms would be
extended to training camps being run by Jihadi outfits and Afghan
refugees, a spokesman for the interior ministry said.

"There will be no exceptions," the spokesman, Rasheed Khan, said in
reply to a question about the government's policy towards training
camps run by Afghan refugees and Jihadi organizations, at a
briefing.

Interior Ministry Secretary Tasneem Norani would meet Afghan
ambassador in Islamabad in a day or two to inform him about the
government's plan to recover illegal arms from Afghan refugees, the
spokesman said. Interior Minister Moinuddin Haider would visit all
the four provinces from June 15 to meet governors and finalize a
strategy for a crackdown to be launched from June 21, after the end
of arms amnesty period, he said.

Moreover, he added, surprise checks of police stations would also
be carried out to monitor progress of illicit arms recovery
campaign. Regarding religious parties, the spokesman said they had
assured the government of full support to its arms recovery drive.

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20010609
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Planning body opposes two-tier power tariff
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By Khaleeq Kiani

ISLAMABAD, June 8: The Planning Commission opposed introduction of
fixed charges under a two-tier power tariff and 75 paisa per unit
increase, saying the WAPDA figures were fictitious and meant to
burden consumers.

Ghulam Haider, chief of Energy Wing of the Planning Commission,
pleaded before the National Electric Power Regulatory Authority
(Nepra) that WAPDA petitions were not maintainable and the
consumers must not be made to bear the brunt of the utility's
inefficiencies.

NEPRA directed WAPDA to submit within six days relevant information
sought by the case officers and interveners so that the authority
could come up with a final determination. The Planning Commission
representative feared that introduction of two-tier tariff to
recover fixed charges from domestic and commercial consumers would
open floodgates of corruption as it would require new surveys and
verification.

He believed that consumers would tend to declare low load in
connivance with WAPDA staff to avoid fixed charges. He argued that
there was no need to make 26 per cent line losses part of the fixed
cost and secondly all the inefficiencies of WAPDA should not be
passed on to the consumers twice, once in the shape of fixed
charges and other as energy cost.

The Planning Commission was of the view that while calculating the
fixed cost of generation, transmission and distribution facility,
operation and maintenance cost, interest, depreciation and exchange
rate variation should not be accounted for as some of the WAPDA
facilities were 23 years old that should be charged at book value
of the asset.

The Commission believed that most of the material and equipment in
the distribution system was manufactured locally, therefore no
exchange rate variation should be applied on these assets. Ghulam
Haider said that WAPDA had used the same figures for fuel price
increase on which NEPRA had already increased the tariff.

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20010609
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NEPRA chief concerned over load-verification plan
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Staff Reporter

ISLAMABAD, June 8: While the Ministry of Finance and other federal
ministries challenged WAPDA's basic financial claims, the utility
sought new rates of Rs 55 and Rs 132 per kilowatt for domestic and
commercial consumers respectively as "fixed charges" in addition to
a 75 paisa per unit increase with effect from July 1.

Justice (retd) Saad Saud Jan, the Chairman of National Electric
Power Regulatory Authority (Nepra), while hearing the petitions of
WAPDA on tariff raise and fixed charges repeatedly said he had
concerns about house-hunt by the WAPDA staff in the name of load
verification and demanded a categorical assurance from the utility
to maintain privacy of the citizens but of no concrete result.

The Ministry of Finance placed on record that Chairman WAPDA Lt-Gen
Zulfiqar Ali Khan, being himself from the defence division should
take care of over Rs3 billion electricity arrears as finance
ministry allocated a single-line budget to the defence division and
had no lever for at source deductions.

Tehsin Iqbal, Joint Secretary Corporate Finance, represented the
Ministry of Finance and stated that most of WAPDA claims for public
sector dues were not correct. He deplored that WAPDA sent
exaggerated bills to government agencies and 23 federal ministries
and division had complained in writing that WAPDA never turned up
to reconcile billing figures.

At times, heated debate was witnessed at the public hearing as the
Ministry of Finance, WAPDA and its companies and some interveners
accused each other of corruption, incompetence, mismanagement and
electricity theft. The NEPRA chairman had to intervene time and
again to maintain order.

He said the domestic category constituted 82 per cent of total
consumers with a consumption of 48 per cent electricity but yielded
only 32 per cent revenue. Fourteen per cent commercial consumers
consumed five per cent units and contributed 13 per cent revenue.
About 1.7 per cent industrial consumers consumed 28 per cent units
but contributed 36 per cent revenue. Similarly, bulk consumer had a
total share of 0.3 per cent but consumed 7 per cent units and
contributed 9 per cent revenue. Agricultural consumers with 1.5 per
cent share consumed 12 per cent units and yielded 8 per cent of
total revenue.

He said under the new package, WAPDA intended to increase the limit
of lifeline consumers from 50 units to 100 units without any tariff
change though the tariff for units 51 to 100 would come down from
Rs 1.72 to Rs 1.40.

The fixed charges of Rs 55 per month for domestic consumers would
be applicable on those who had sanctioned load of more than 0.5
kilowatt and the five slabs have been reduced to three. The
domestic consumers using 100 to 300 units would be charged at Rs
2.50 plus Rs 55 fixed charges. Similarly, the consumers using more
than 300 units would be charged at Rs 5.35 plus Rs 55 fixed charges
at the rate of 1 kilowatt. Earlier, the tariff for 300 to 1000
units were charged at Rs 5.32 per unit, 1000 to 4000 units at Rs
6.60 per unit and above 4000 units were charged at Rs 7.13 per
unit.

NEPRA member from NWFP, Eng Abdul Rahim said cross-subsidies could
be eliminated through increase in rates instead of fixed charges.
He feared if the principle of fixed charges were accepted then
WAPDA would come again for increase in fixed charges. He also
questioned the need for fixed charges as proxy for peak load
demand.

Tehsin Iqbal, representing finance ministry challenged WAPDA's
claims for public sector arrears and said the federal government
had done its best to alleviate WAPDA of its problems but could not
go for illegal things. He informed that Rs 36.6 billion worth of
WAPDA debts were converted into government's equity to improve its
health.

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20010608
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Pakistan, Italy to boost defence cooperation
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ISLAMABAD, June 7: Pakistan and Italy reached a consensus to boost
cooperation in the field of defence production. The signing of
minutes ceremony was held in the Defence Production Division
between Pakistan and Italy.

The minutes were signed by Admiral Giampaolo Di Paola, Secretary-
General and Director-General, National Armament, on behalf of Italy
while the Secretary, Defence Production Division, Air Marshal Zahid
Anis( retired), represented Pakistan. Both sides expressed the view
that this was the first step towards increasing defence cooperation
between the two countries.

The secretary, defence production, thanked Admiral Paola for the
kind sentiments and hoped that his visit would go a long way in
enhancing defence cooperation between the two countries. Meanwhile,
the Italian delegation, led by Admiral Paola, called on the
Secretary, Defence, Lt- Gen Hamid Nawaz Khan (retired).-APP

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20010608
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National Economic Council okays major uplift projects
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Staff Reporter

ISLAMABAD, June 7: The National Economic Council (NEC) has approved
a number of development projects in the new PSDP including Rs6
billion water supply project for Karachi.

Deputy Chairman Planning Commission Dr Shahid Amjad Chaudhry told
reporters that the chief executive had changed the entire
investment strategy with a view to having major development
projects.

"The Karachi water supply project will get Rs 6 billion in the next
PSDP to have another 100 million gallon water for the city", he
further stated. The project will be completed in two and half years
time. "The NEC has also approved two major projects for Karachi
which include Northern Bypass and Lyari Expressway at a cost of
Rs4.5 billion and Rs3 billion separately", he said. Similarly, he
said that Rs6 billion would be provided for water supply project in
Quetta.

He said Rs 13 billion had been allocated for Gomalzam dam in the
NWFP which would be completed in four years. Overall, he said Rs100
billion would be spent for next 10 years for development of new
water resources. He said Rs7 billion had been allocated for Mirani
dam in Balochistan to be completed in seven years. He said Rs0.9
billion will be extended during 2001-2002 for the project.

Dr Chaudhry said that the Punjab government had been given an offer
to undertake either Thal Reservoir project or Greater Thal Canal
project. Each project will cost Rs25 billion and during the first
year Rs500 million will be extended for this purpose. He said 4.5
million acres feet of land will be covered under the project. He
disclosed that the Kalabagh dam had not been included in next 10
year development program. "It has not been abandoned but for the
next 10 years it would not be considered".

The deputy chairman said that technical study for Basha dam had
been approved, which would be constructed in northern areas. "Then
the NEC also approved raising of Mangla Dam height for which
technical study will be conducted during the next financial year."

The Right Bank Outfall Drainage (RBOD) project has also been
approved at a cost of Rs15 billion. He said Rs0.2 billion would be
provided in next PSDP for the project to be completed in four
years' time.

In reply to a question, he said that agriculture would be given lot
of attention and as a first step, considerable areas under rice
cultivation would be shifted for cotton and other crops. "The NEC
has approved Rs 0.7 billion for investment in the agriculture
sector". He said Rs1.1 billion would be spent for replacing
Sargodeh model for increasing agricultural productivity in other
parts of the country.

The deputy chairman said that Rs1.2 billion had been allocated for
Pindi Bhaatia-Faisalabad road to be completed in 2003. Likewise, he
said, Rs1.5 billion would be extended for Islamabad-Peshawar
Motorway during the next financial year to be completed in 2003.
"Then Makran Coastal Highway project will get Rs2 billion in the
new PSDP". The total cost of the project is Rs12 billion and it
will be completed in four years.

"The NEC has further approved Rs15 billion Gawadar Port project for
which one billion rupees will be given during the next financial
year." He said the government was expecting some funding by China
for the project. He told a reporter that some funding for these
projects would be provided from the new PSDP while rest of funding
would be mobilized during next two to three years.

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20010608
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Benazir flays India for inviting Musharraf
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Monitoring desk

NEW DELHI, June 7: Benazir Bhutto has said that she is disappointed
by the Indian government's decision to invite Gen Musharraf for
talks.

In an interview with the Times of India on Thursday, she PPP
advocates dialogue between India and Pakistan for a resolution of
outstanding disputes between the two countries, including the
Kashmir dispute. However, it is double-minded about the world's
largest democracy dealing with a military dictatorship in Pakistan.

She opined that an agreement signed by an unelected and
unrepresentative government would be of no legal binding on a
future parliament or government in Pakistan. This is the view of
the opposition alliance for the Restoration of Democracy of which
the PPP is a part, she added.

Replying to another question she said the PPP has proposed a Camp
David type solution envisaging a step-by-step approach. In that we
proposed to open borders between the two Kashmirs, allowing for
free movement of the people from one part to the other whilst India
and Pakistan agree on how to maintain a safe open border. She said
that she hoped to visit India some time later this year.

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20010607
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Irresponsible leaders harming country
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ISLAMABAD, June 6: Chief Executive Gen Pervez Musharraf said that
Pakistan was being regarded as a terrorism-sponsoring country due
to irresponsible statements and actions by irresponsible leaders.

Speaking at the inaugural session of a two-day National Seerat
Conference here, Gen Musharraf asked religious scholars to look
deep into the damage caused by irresponsible statements and actions
and do not allow the use of religion for political ends.

The chief executive urged the Ulema to help create religious
harmony which was necessary both for attracting foreign investment
and stability of the country. He said both the foreign and domestic
investors were not ready to invest in Pakistan "because of the law
and order situation."

"The law and order situation is the first thing to be corrected to
lure foreign investment," he told the gathering. Gen Musharraf said
it was not easy to attract foreign investment once the image of the
state was marred. He said because of the law and order situation,
there was talk of even declaring Pakistan a "terrorist state,"
while others referred to it as "a failed state."-Agencies

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20010607
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WAPDA seeks hike in power tariff: Line losses claim disowned
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By Khaleeq Kiani

ISLAMABAD, June 6: Amid strong opposition from various consumer
groups, WAPDA sought 75 paisa per unit additional increase in
electricity tariff with effect from July 1, 2001, to cover its Rs35
billion projected losses next year.

The cross-examination by the chairman and members of National
Electric Power Regulatory Authority (Nepra) and interveners
representing various consumer groups however forced the WAPDA team
to disown statements and presentations of WAPDA chairman Lt Gen.
Zulfiqar Ali Khan of having reduced line losses from over 42 per
cent to 24 per cent since the 1998 army take over in WAPDA.

Five interveners namely Association of Cooperatives Housing
Societies Punjab (ACHSP), Islamabad Chambers of Commerce and
Industry (ICCI), Consumer Right Commission of Pakistan (CRCP),
Liberals Forum Pakistan (LFP) and Pakistan Poultry Association
(PPA) opposed any tariff increase on various grounds but with one
conclusion that it would cripple the economy and the consumer as
well and reduce electricity consumption.

He said that there had been devaluation of 23 per cent since last
year and resultantly WAPDA had suffered Rs17 billion losses as
capacity payments to IPPs were made in dollars. The six per cent
inflation had an impact of Rs1.3 billion while 107 per cent
increase in furnace oil and 72 per cent increase in gas prices have
put additional burden of Rs17.7 billion on the organization.

He said that tariff increases allowed by Nepra four times recently
helped bridge this gap but the Rs9.7 billion remaining gap required
to be covered by the proposed petition. The revised agreements with
IPPs increased the capacity payments from Rs23.6 billion in 1999-00
to Rs36.9 billion in 2000-01.

"Next year the situation is going to be more disastrous", said Mr
Nizam as he revealed that payments to IPPs would touch Rs105.5
billion from Rs80 billion this year. Energy purchase price (EPP)
would go up from Rs43 billion to Rs45 billion while capacity
purchase price (CPP) would jump to Rs59.8 billion from Rs36.9
billion. WAPDA's total income for the current fiscal year is
estimated at Rs185 billion against its liabilities of Rs201
billion, a shortfall of Rs16 billion. Next year, the income is
projected to come down to Rs183 billion while expenditure will go
up to Rs218 billion, an expected shortfall of Rs35 billion, the
Nepra was informed.

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20010607
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Vajpayee welcomes Musharraf's remarks
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MUMBAI, June 6: Indian Prime Minister Atal Behari Vajpayee has
welcomed the speech by Gen Pervez Musharraf asking religious
hardliners to stop making statements against India.

"India has always been asking for an end to the propaganda war
between the two countries. This is the first step in the direction
of lasting friendship between the two countries," Vajpayee said
while talking to reporters. "I want to see a full text of the
statement. But, from what I have read, it is a good sign and I
welcome the statement," Vajpayee said after arriving in Mumbai to
have surgery on his knee. "We met in the battlefield and now we
will meet in the house of peace. Right from the beginning, India
has been ready to discuss all issues with Pakistan including
Kashmir," Vajpayee added. Gen Musharraf sent his "best wishes" to
Vajpayee ahead of the operation.-AFP

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20010607
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CE asked to meet APHC leaders before India visit
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Staff Correspondent

ISLAMABAD, June 6: The Pakistan Muslim League has called upon Gen
Pervez Musharraf to take all political parties into confidence
before his visit to New Delhi for talks with the Indian leadership
on important issues, including Kashmir.

He said since the central executive committee (CEC) had decided to
re-name the party as Pakistan Muslim League after Nawaz group
registered itself with the Election Commission as Nawaz group of
PML, the media should no more call or write it as like-minded or
Quaid-i-Azam group of PML.

While discussing the possibilities of revival of democratic order
in the country, he repeated his party's demand for restoration of
the suspended assemblies as being the most appropriate option for
the regime to be immediately recognized by the international
community.

Mr Khan said a mechanism had to be evolved under which no future
elected assembly could be dissolved. He said the party had
constituted 27 committees to give recommendations on various
issues. He said the finance committee would prepare and present its
recommendations on the ensuing budget to the government by June 12.

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20010605
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Structural changes aim at self-reliance: Shaukat
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By Our Reporter

ISLAMABAD, June 4: Finance Minister Shaukat Aziz has said the
government instituted structural changes in the economy with the
underlying aim of achieving self-reliance by reducing dependence on
foreign assistance and enhancing reliance on domestic resources.

He said the government had also devised a strategy to rid the
country of growing debt burden. Simultaneously, the minister
stated, broad-based governance reforms were being implemented,
which would ensure the sustainability and effectiveness of economic
reforms. He said the government had identified four major drivers
of growth, namely, agriculture, oil and gas, small and medium
enterprises (SMEs) and information technology.

He at length on the devolution plan and termed it a powerful
concept allowing people to control their destiny. This plan, he
said, would devolve financial and administrative authority to local
tiers of government, empowering elected local authorities to
effectively administer departments like education, health etc, at
the district level. He said the devolution plan was the most potent
mechanism for social changes and empowerment of the people at the
grass-roots level.

The finance minister also spoke on the negative fallout of
sanctions imposed on Pakistan in the wake of nuclear tests. He said
the sanctions were adversely impacting the efforts of the
government in increasing growth and reducing poverty which were
essential for the prosperity of people.

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20010605
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Washington to discuss National Missile Defence issue
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By Tahir Mirza

WASHINGTON, June 4: Pakistan's attitude towards the Bush
administration's National Missile Defence (NMD) system will be
among the important points of discussion with senior United States
officials during Foreign Minister Abdul Sattar's three-day visit to
Washington beginning on June 18.

Pakistan's position on the controversial NMD has been
unenthusiastic and closer to that of China, Russia and America's
own allies in the European Union, all of whom are concerned at the
abandonment of the anti-ballistic missile treaty (ABM) inherent in
the proposed new system, arguing that the treaty has been a
mainstay of the disarmament regime. India, on the other hand, has
welcomed the scheme.

Mr Sattar will meet National Security Adviser Condoleezza Rice on
June 18 and Secretary of State Colin Powell, on June 19.

The question of sanctions and Islamabad's expectations of the
proposed Musharraf-Vajpayee summit can be expected to figure
prominently in the talks, and US officials will obviously be
interested in learning how Islamabad intends to deal with the
Taliban regime in Afghanistan. Mr Sattar can also expect to be
closely questioned on General Pervez Musharraf's plans to hold
general elections and restore the democratic process. On the
international front, non-proliferation will be an obvious talking
point on the agenda and also Pakistan's contribution to the
international peace-keeping force in Sierra Leone.

The Bush administration has asked Congress for a waiver in
sanctions against Pakistan that prevent the sending of US military
equipment to the military, which needs to be properly supplied if
its offer of a 4,000-strong detachment of peace-keepers has to have
any meaning. The waiver asked for by the Bush administration should
have gone through Congress by now, but has been delayed because of
the change in the complexion of the Senate resulting from the
defection of Republican James Jeffords.

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20010605
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Strong Nepal vital for peace: CE
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ISLAMABAD, June 4: Chief Executive Gen Pervez Musharraf said that a
strong and prosperous Nepal was vital for peace and stability in
the region.

In a message of felicitation to King Gyanendra, Gen Musharraf
expressed his confidence that Pakistan and Nepal would continue to
work together "in our shared quest for peace, stability and
development of our region and for the betterment of our peoples."
He also reaffirmed Pakistan's abiding commitment to the enhancement
of close ties between the two countries.

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20010604
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CE's visit will settle Kashmir dispute: Vajpayee optimistic
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NEW DELHI, June 3: Indian Prime Minister Atal Behari Vajpayee said
he hoped the upcoming visit by Gen Pervez Musharraf to New Delhi
would help solve the Kashmir dispute.

"I am hopeful we will find a solution to the Kashmir dispute," Mr
Vajpayee told a televised public gathering in Gujarat. "We are
ready for discussions on any subject, including Kashmir," the
premier said. "We want peace in our country, in our neighborhood
and the world. I invited General Musharraf to achieve this goal."
"I am happy Musharraf has accepted my invitation, and we will talk
on all issues. I am sure some concrete way will emerge out of the
talks," said Mr Vajpayee.

Addressing reporters in New Delhi last Monday, Foreign Minister
Jaswant Singh said he approached the talks "with realism." "It is a
long road to walk together again," he said. However, Parliamentary
Affairs Minister Pramod Mahajan, a key aide of Premier Vajpayee,
meanwhile warned the summit would not lead to immediate peace
between India and Pakistan.

"No one is thinking that overnight one summit between Vajpayee and
Musharraf should solve all the problems," Star TV quoted Mr Mahajan
as saying. "It may set out a process of motion, which may finally
solve the problem." Mr Mahajan said Mr Vajpayee should discuss with
opposition leaders the subjects he planned to discuss with Gen
Musharraf. -Agencies

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20010604
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House raids in arms drive likely: Moin
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Staff Correspondent

KARACHI, June 3: The government does not want to unnecessarily
trouble the masses, but it may carry out house raids during the
planned campaign for deweaponizing the country.

This was stated by Interior Minister Moinuddin Haider during a
brief chat with newsmen. In response to a question, the minister
said: "No army in the world wants to unnecessarily trouble the
common people. We also don't want to harass our masses. "However,
we cannot rule out raids in the forthcoming deweaponization
campaign. This is so because we want to rid the country of
weapons," said Moin.

He said that from June 5 to 20, people would be invited to
surrender their arms voluntarily: so, this is an amnesty period.
"From the 21st we are going to force people to hand over their
weapons. And we will be using all the means at our disposal to
recover these weapons. If need be we will use strong tactics like
raids, etc." The minister warned that the people found to be in
possession of illegal weapons after June 21 would have to face
strong punitive action spelt out in the relevant laws.

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20010604
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17 fighters killed in Valley
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JAMMU, June 3: Police claimed 14 Mujahideen belonging to Lashkar-i-
Taiba, Jaish-i-Mohammed and Hizbul Mujahideen were killed in a
gunbattle with Indian troops in Poonch district. "Up to now, we
have information that 14 militants have been killed," Kamal Saini,
superintendent of police in charge of Poonch district said.

In another incident, three militants were killed by Indian troops
near Surankote, in Poonch district.-Reuters/AFP

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20010604
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Rs 15 billion cash flow package for WAPDA in doubt
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By Khaleeq Kiani

ISLAMABAD, June 3: The Karachi Electric Supply Corporation (KESC)
has refused to transfer around Rs4.2 billion to WAPDA as decided by
the finance minister and chairman of WAPDA and KESC last month.

This has apparently called into question the sustainability of a Rs
15 billion cash flow package agreed to by the finance minister
Shaukat Aziz and chairman of both the power utilities (WAPDA and
KESC) Lt-Gen Zulfiqar Ali Khan on May 15, sources in the finance
ministry told Dawn.

The package was finalised following months of correspondence and
meetings between the WAPDA and finance ministry wizards to melt
down Rs 23.4 billion WAPDA dues stuck up till end-March with the
public sector consumers. This figure has since been reduced
slightly by Rs 2.9 billion but Rs 20.5 billion arrears against the
public sector are still intact.

Under the decision, the KESC was required to pay Rs 4.2 billion in
two parts. First, by paying Rs 2.4 billion out of a bank borrowing
of Rs4.76 billion guaranteed by the federal government and, second,
by releasing Rs1.8 billion out of the rupee proceeds of a US$30
million loan from the Asian Development Bank.

The KESC has clearly indicated the federal government that "because
of its cash flow problem it would not be possible to transfer any
funds to WAPDA," the finance ministry sources quoted a KESC
communication. The finance ministry did not waste too long to bring
this to the knowledge of the World Bank Power Sector Mission at a
wrap-up meeting on May 26, these sources added.

The finance minister had also agreed that the federal government
will pick up Rs1.6 billion liability as book adjustment (debt
service liability) of the Azad Kashmir government as it did not
have enough money to pay. The federal government also agreed to pay
Rs400 million through another book adjustment of debt service
liability to WAPDA on account of agricultural tubewells in
Balochistan. The finance minister promised that Rs540 million
outstanding against the NWFP would be deducted on receipt of
confirmation from WAPDA of having paid Rs one billion to the
province on account of net hydel profit.

For the payment of Rs 7.5 billion outstanding against the Sindh
government, it was agreed that Rs two billion would be deducted at
source in May and June, 2001. Another Rs one billion payment of
WAPDA would be made through an overdraft during the first quarter
of the next fiscal year while the balance of Rs4.53 billion would
be paid during the first quarter of the next year.

Of the total public sector receivables, federal government owed
Rs5.5 billion to WAPDA at the end of March. Rs1.5 billion were
outstanding against AJK, Rs4.12 billion against FATA, Rs1.2 billion
against agricultural tube wells in Balochistan, Rs2.5 billion
against Punjab, Rs7.6 billion against Sindh, Rs682 million against
NWFP, and Rs203 million against Balochistan. However, Punjab, Sindh
and Balochistan paid Rs2 billion, Rs700 million and Rs187 million
during April and May, official sources said.

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20010603
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CE tells army to start RBOD project work estimated at Rs16bn
-------------------------------------------------------------------

KARACHI, June 2: Chief Executive Gen Pervez Musharraf has directed
the army engineering corps to start work on the multi-billion-rupee
Right Bank Outfall Drain on August 14. He issued the directive
after a presentation made by Commander 5-Corps Engineering, Brig
Asif Ghazali, at the Governor House here on Saturday. The RBOD
project was assigned to Planning Commission for analysing and
finalizing its feasibility report.

Brig Asif Ghazali informed the chief executive that the army
engineers planned to carry out the project at a cost of Rs16
billion and complete the same in four years. He said that in the
first phase, Rs2 billion will be needed and the remaining amount in
subsequent years. The estimates for RBOD project submitted by
another agency were also taken into consideration. The other
agency's estimates stood at about Rs76 billion with eight years as
completion time.

On completion, the 270-km long Drain will have a capacity to carry
2,276 million cusecs of effluent to be drained out into the sea.-
APP

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20010603
-------------------------------------------------------------------
'Arms drive to continue till meeting of target'
-------------------------------------------------------------------

ISLAMABAD, June 2: The ongoing campaign for recovery of illegal
weapons will continue till the government achieves the set targets.
The government started a phased countrywide campaign to recover
illegal weapons from people in a bid to improve the law and order
situation.

In the first phase, a media campaign is being run to raise
awareness among the people about the prevalent social problems due
to abundance of arms.

In the second phase starting from June 6, people possessing illegal
weapons will be asked to surrender these weapons by June 20.
Rasheed said, this will be an amnesty period for people to
voluntarily surrender their illegal weapons. Rasheed said people
failing to deposit illegal weapons will be liable to punishment
under the law.

After expiry of amnesty period raids will be carried out on the
reports of intelligence agencies and informers for recovery of
illegal arms.

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20010603
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Benazir, Asif facing eight corruption cases, says NAB
-------------------------------------------------------------------

ISLAMABAD, June 2: Chairman National Accountability Bureau (NAB)
General Khalid Maqbool has said that NAB is currently processing
eight cases of corruption against former ruling couple Ms Benazir
Bhutto and Asif Ali Zardari.

This he stated in a recent interview with British Broadcasting
Corporation during his visit to The Hague where he attended "Global
forum on fighting corruption and safeguarding integrity." While
speaking on the possibility of Ms Benazir Bhutto's conviction on
corruption charges, he said, that NAB as an anti- corruption
institution is not targeting any individual. Instead, he added, it
has an institutional role to transform society into a corruption-
free social order.

"The government, however, is making all out efforts to bring the
culprits to task," he remarked. He said, "the government's reform
agenda, in our part of the world, is targeted to eradicate
political tradition of institutional or individual corruption
culture to mature the democratic process in a developing society."
-APP


BUSINESS & ECONOMY
20010609
-------------------------------------------------------------------
Big discounting in money market: Rupee down by 25 paisa
-------------------------------------------------------------------
Staff Reporter

KARACHI, June 8: Banks resorted to heavy discounting of Rs 17
billion as the inter-bank money market remained tight. The State
Bank raised the discounting rate from 13 to 14 per cent on to
stabilize the rupee.

Senior bankers said a basic reason for this heavy discounting was
that banks had to average out their weekly cash reserves at five
per cent of total deposits. They are allowed to keep cash reserves
at four per cent of total deposits on any working day but are
supposed to maintain it at five per cent on the weekly basis.

Bankers said the market was also tight because of outflow of
billions of rupees in the wake of the corporate debt payments for
which the State Bank had provided foreign exchange last earlier
this week. The one per cent increase in SBP discount rate announced
on June 6 also contracted liquidity in the banking system. Bankers
said because of heavy discounting, call rates remained pegged to
13.90-13.95 per cent throughout the day. The inter-bank market had
seen a discounting of Rs 6.3 billion on Thursday also. Earlier in
the week banks had resorted to a discount of about Rs5 billion.

THE RUPEE: Meanwhile the rupee lost 25 paisa to a US dollar on
Friday after making a three per cent recovery in earlier days.
Bankers said the rupee closed at 62.60/62.65 to a dollar on Friday
against the previous close of 62.30/62.40. They said the rupee fell
chiefly because of commercial demand for dollars by a big corporate
group engaged in staple fibre manufacturing.

In the open market the rupee lost 20 paisa to a dollar. Currency
dealers said the rupee closed at 65.70/65.90 to a dollar for spot
buying and selling on Friday against the previous close of
65.50/65.70.


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20010609
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'Budget to put economy back on track'
-------------------------------------------------------------------

ISLAMABAD, June 8: Growth-oriented and investors' friendly economic
strategy will serve as major plank in Budget for fiscal 2001-2002
to retrieve the economy back on sound and sustainable footing along
with vibrant role of private sector.

"Four sectors will receive principal focus in the budget including
Agriculture, Information Technology, SMEs and Oil and Gas,
identified as mega drivers of growth," Economic Adviser, Dr
Ashfaque Hasan Khan said.

The budgetary strategy, he stated, would accord top priority to
these sectors to check the menace of poverty, adding that even an
impressive growth rate is unable to address the poverty issue. For
this purpose, he continued, the government would thus have to make
intervention to arrest this scourge through different measures
including investments in the social sector.

Agriculture sector, linchpin of the economy, is posting negative
growth this year owing to drought impact, he said adding, an
impetus needs to be injected by addressing major constraint - water
shortage through construction of small dams for water conservation
and augmentation.

Describing the budget as an instrument to accelerate economic
growth, Dr Ashfaque said concrete measures would be adopted to
boost the role of private sector in the growth process.
Highlighting the salient aspects of economic situation looming over
current fiscal, Dr Ashfaque Hasan said the inflation is likely to
hover at 4.7 per cent against the budgetary target of 6 per cent
which was however pegged at 3.4 per cent during previous financial
year owing to diminishing propensity in petroleum prices at the
international market.

Having these projections in the agriculture and industrial sector,
GDP growth rate is likely to slide down to 3 per cent against the
budgetary benchmark of 4.5 per cent for fiscal 2000-2001. Record
growth in large scale manufacturing is attributed to positive
performance by all the eleven major groups including textile,
chemical, leather, food and beverages, paper and paper printing and
publication, machinery and equipment’s, automobiles, basic metals,
petroleum, tyre and tubes, non metallic material etc.

About the slippage in revenue collection against the budgetary
target, he said, revenue collection target was too ambitious adding
the government collected around Rs100 billion access revenue in two
years against the collection of similar amount in the previous five
years.-APP

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20010608
-------------------------------------------------------------------
Country likely to earn $9.16 billion in exports
-------------------------------------------------------------------

ISLAMABAD, June 7: The country's exports during first 11 months of
the present fiscal totalled around $8.25 billion as against $7.69
billion, during the corresponding period of last year, showing an
increase of 7.2 per cent or $1.2 billion.

Minister for Commerce, Industries and Production, Abdul Razak
Dawood while giving the details at a press conference on Thursday,
expressed his confidence that the country will realize around $9.16
billion of exports this year, coming close to budgetary target of
$9.2 billion. He, however, added that as per the target of $10
billion set by himself, the country has achieved around 92% of that
target.

The minister said, the crossing of $9 billion mark in exports will
be a record in the history of country. The exports in the month of
May, the minister informed, amounted to $793 million showing over
93 per cent achievement against the target. The exports of $793.1
million in May are also up by 7.8 per cent and 4.4 per cent when
compared to previous month and the corresponding month of last
fiscal, respectively.

The minister underlined global slowdown with less industrial
activity and fall in commodity prices as the major factors of not
exactly meeting the exports target. "We have lost at least $100
million due to fall of commodity prices in terms of rice exports."
Razak Dawood said, the country registered 30 per cent increase in
rice exports in terms of quantity this year, but 3 per cent
decrease in value terms, adding, "we have exported all of irri-6
and irri-9 this year, and the new crop will have no backlog."

The minister in response to a question informed the newsmen that
the Trade Policy for 2001-2002 will be announced on June 29. Dawood
said, in the backdrop of Chinese Premier's recent visit to Pakistan
we are hopeful of having enhanced bilateral trade with China,
adding, a Chinese delegation is coming here in this respect. To a
question, he said, polyester fibre and grey cloth are among the
items to be exported to China, adding, our exports to China will
register increase next year.

The minister in response to a query informed that the country's
imports during July-May this year were to the tune of $9.797
billion with $1.5 billion of trade gap as against $1.6 billion of
trade gap last year. Razak Dawood while giving the comparison of
exports as per cent of imports this year said, 84.2 per cent of
imports were covered by exports during July-May of this fiscal as
against 82.7 per cent last year. -APP

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20010608
-------------------------------------------------------------------
Rupee up 1% in inter-bank market
-------------------------------------------------------------------
Staff Reporter

KARACHI, June 7: The rupee on Thursday gained 70 paisa or one per
cent against the US dollar in inter-bank market on renewed supply
of dollars, on relatively low demand. Bankers said the rupee
finished at 62.30/62.40 to a dollar at the end of normal trading
hours in inter-bank market up 70 paisa over the previous close of
63.00/63.10. The rupee regained more of its lost strength as local
and foreign banks continued to sell dollars on renewed supply.
Bankers said the pro-rupee sentiment was strong as at one time it
was quoted as high as 62.10 to a dollar.

In the past two weeks the rupee had lost four per cent of its value
against the dollar but it made a swift recovery of two per cent on
Wednesday and more than one per cent on Thursday. Bankers said the
one per cent increase in SBP discount rate announced on Wednesday
boosted the rupee by making dollar holding an expensive affair.

SBP on Wednesday raised the discount rate by one per cent to 14 per
cent to shore the rupee up. This made the money market a little
tighter on Thursday with call rates hovering around 13.95 per cent.
Bankers said a discounting of Rs6.3 billion also took place on
Thursday adding that tight rupee market also helped the local
currency recover its lost value.

"The rupee gained chiefly because it had lost its value in the past
two weeks not due to any weakness in economic fundamentals but due
to mismatch in cash flow timings," said treasurer Mumtaz Yousuf of
Hong Kong & Shanghai Banking Corporation. Yousuf who is also
secretary general of Financial Markets Association said the banks
that had overbought dollars in the past two weeks began to sell
them. He described the one per cent increase in SBP repo rate a
right step towards stabilizing inter-bank exchange rates.

In the open market also the rupee gained 30 paisa on Thursday.
Currency dealers said the rupee closed at 65.50/65.70 to a dollar
for spot buying and selling against the previous close of 65.80/
66.00. They said the rupee made a smart recovery in kerb as the
decline of dollar in inter-bank market drove many speculators and
fund managers to sell greenbacks.

On Wednesday the rupee had gained over 1.5 per cent against US
dollar in the open market. On Thursday it made a modest half per
cent recovery. Earlier, the rupee had fallen in kerb by about four
per cent in past two weeks chiefly in line with its fall in inter -
bank market.

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20010607
-------------------------------------------------------------------
State Bank hikes discount rate by 1%: Rupee recovers 2 per cent
-------------------------------------------------------------------
By Mohiuddin Aazim

KARACHI, June 6: The inevitable has happened. The State Bank has
raised its repo or discount rate by one per cent to 14 per cent,
effective from June 7, says an SBP circular. The central bank had
to take this decision to keep the rupee from falling further.

SBP repo or discount rate is the interest rate at which it lends
money to banks for up to three days against government securities.
Senior bankers said the rupee opened at 64.30 to a US dollar on
Wednesday but rose to 63.00/63.10 toward normal closing of inter-
bank foreign exchange market thus showing a major recovery of two
per cent in a single session.

In post closing transactions meant for next day the local currency
gained further and was quoted as high as 62.40 to a dollar. Bankers
said what enabled the rupee to recover grounds, so impressively,
was heavy dollar selling in the market initiated by Citibank with
other local and foreign banks following the lead.

For the past two weeks many banks had been buying more and selling
less dollars anticipating further decline of the rupee. On
Wednesday several banks ran out of this space and had no option but
to sell dollars thus allowing the rupee to make a quick recovery.
Senior bankers said what else drove even those banks that were well
within their net open position limits, was the one per cent
increase in SBP repo rate. They said the increase was a clear
signal from the central bank that it would not let the rupee slip
further.

The State Bank had last raised its repo or discount rate by one per
cent to 13 per cent on October 4, 2000 to support the rupee when it
had touched a record low of 59.75/59.80 to a dollar in the inter-
bank market. At that time SBP had also enhanced the cash reserve
requirement for banks from five to seven per cent.

This time around, the central bank has only raised its repo or
discount rate and has left cash reserve requirement unchanged at
five per cent.

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20010607
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Rs 130 billion Public Sector Development Programme envisaged
-------------------------------------------------------------------
By Ihtashamul Haque

ISLAMABAD, June 6: Gen Pervez Musharraf said that Rs130 billion
Public Sector Development Program (PSDP) has been envisaged for
2001-2002. According to informed sources, he told the 8th meeting
of the Economic Advisory Board (EAB) that substantial funds will be
provided for development projects during the next financial year.
And that was why, he said, Rs130 billion PSDP has initially been
worked out for 2001-2002 against Rs120 billion of the current
financial year. The PSDP for the current financial year, which had
earlier been slashed from Rs120 billion to Rs110 billion, has again
reportedly been cut to Rs 100 billion due to unexpected revenue
shortfalls.

The Planning Commission had proposed Rs 134 billion new PSDP which
was being opposed by the Priorities Committee of the Finance
Ministry. The Committee had told the Annual Plan Coordination
Committee (APCC) meeting held on May 19 that due to paucity of
funds the 10 per cent usual increase could not be made and that
Rs120 billion could only be made available for the new PSDP.

The chief executive underlined the significance of exports,
reserves, economic growth and revenues for being critical variables
where the country had to significantly improve its performance
during the relief period. On the exports front, he said, achieving
8 per cent growth was satisfactory, but "we would like to improve
it further". On the issue of reserves, he said, government was
targeting 3-4 billion dollar in the medium term so that dependency
on external assistance was minimized.

Talking about the privatization, the chief executive pointed out
that some major deals were about to be brought to the market. In
this regard, he specially mentioned public sector banks and PTCL,
which were likely to be disinvested before the end of the calendar
year. He urged business leaders to come forward and to take
advantage of the opportunities.

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20010605
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Planning body finalizes proposals: Budget 2001-02
-------------------------------------------------------------------
By Ihtashamul Haque

ISLAMABAD, June 4: The Planning Commission has finalized its own
consolidated budgetary projections for 2001-2002, estimating Rs
845.1 billion total expenditure including Rs 707.9 billion current
expenditure.

According to the details, total revenues have been estimated to be
Rs655.2 billion - Rs548.9 billion tax revenues and Rs106 billion
non-tax revenues.

The Public Sector Development Program (PSDP) has been estimated to
be Rs 137.2 billion, although the finance division was not ready to
make available more than Rs120 billion for this purpose.

The overall fiscal deficit target has been set at 5 per cent of the
GDP (Rs189.9 billion). The amount of debt servicing has been kept
at Rs271 billion. The amount of bank borrowing has been estimated
to be Rs42.3 billion with total budgetary support estimated at
Rs.52.3 billion including Rs.10 billion from other sources.

Non bank borrowing will be to the tune of Rs63.5 billion, and the
external (net) borrowing has been kept at Rs84.1 billion.

Monetary expansion has been estimated to be Rs155.5 billion.
Rs135.4 billion have been envisaged as private sector investment.
Official sources said that if the government wanted 4 per cent GDP
growth during the next financial year, it would have to make
available funds as proposed by the Planning Commission.

Generally, the sources said, all the four provinces and the federal
ministries and divisions were supporting the Planning Commission
for seeking more funds with a view to achieving 4 per cent GDP
growth rate in 2001-2002.

The Three Year Development Program 2001-2004 has also been
finalized by the Planning Commission to be discussed and approved
by the NEC, the highest economic decision making body. The program,
the copy of which was obtained by Dawn, said the policy and
resources have to focus on lifting the economy by its own
bootstraps and overcoming structural deformities.

The thrust of future economic policy should be to transfer the
existing slow growth and financially constrained economy to a
higher growth and relatively self-reliant economy. Thus the broad
elements of the strategy during the next three year would be:

a) Strengthening of investment and growth process by (1)
transformation of agriculture into a dynamic and high yield sector
with emphasis on self-sufficiency in respect of wheat, edible oils
and pulses; and

(ii) creation of a broad-based manufacturing structure oriented
towards export promotion;

(iii) Human Resource Development, besides promotion of science and
technology and R&D activities for enhancement of agricultural and
industrial productivity; and

(iv) addressing the distributional concerns.

(b) Investment will be increasingly financed out of national
savings, both private and public, to ensure that growth is self-
sustained and self-reliant. Structural problems will be addressed
by broadening the tax base through documentation of the economy,
reducing multiplicity of taxes, improving elasticity of federal and
provincial and local government taxes.

(c) Rationalization of the tariff structure will continue to reduce
anti-export bias in the trade region. The high degree of
concentration of exports, both commodity wise and market wise will
be broken. Maximum advantage will be taken of the new environment
generated by WTO in the fields of liberalised agricultural trade,
textile and clothing sectors.

(d) Since there is a trade-off between technology improvement and
employment opportunities, the issue needs to be resolved carefully.
Special efforts would be made in this connection to promote small
and medium enterprises (SMEs) for employment generation, keeping
the input (specially energy) prices at reasonable level to maintain
the productive competitiveness and profitability and maintenance of
the existing infrastructure and adequate addition of good quality
infrastructure.

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20010605
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Rupee still on decline: $ at Rs 67 in kerb
-------------------------------------------------------------------
Staff Reporter

KARACHI, June 4: The State Bank on Monday sold more than $40
million to a state-run bank to help it absorb the additional
pressure on the rupee in the wake of $43 million debt servicing by
Pak Arab Refinery.

A senior official of the public sector refinery said that by
meeting the debt servicing requirement successfully the company had
sent a positive signal abroad. He said the debt servicing payment
was in connection with the $500 million that Parco had raised last
year for setting up its mid-country refinery.

The $886 million refinery located in Mehmoodkot (Muzaffargarh) had
gone into operation in September 2000 - two months ahead of
schedule  but it was formally inaugurated by Chief Executive
General Musharraf in February this year.

Senior bankers said the rupee closed around 64.20/64.25 to a US
dollar in inter-bank market on Monday down 35 paisa overnight
adding that some deals were transacted even at 64.30/64.35 per
dollar. "Had the SBP not sold dollars in the market the rupee might
have headed for a free fall," said a foreign banker.

In the open market the rupee touched a new low of 67 per US dollar.
Currency dealers said the rupee closed at 66.90/67.00 per dollar in
spot buying and selling. They said the rupee went down in kerb in
line with its fall in the inter-bank market. Since May 21 when the
rupee started falling on debt payments and corporate demand for
dollar it has lost about four per cent of its value in both inter-
bank as well as open currency market.

It was for the first time on Monday, however, that the State Bank
came to the rescue of the rupee by selling dollars to a state-run
bank that remitted out $43 million on behalf of Parco. Currency
experts say the rupee may remain under pressure in the remaining
days of this fiscal year as SBP cannot supply enough foreign
exchange in the inter-bank market to support it. Under the terms of
$596 million IMF standby credit program SBP is to keep its net
foreign assets at a level that requires foreign exchange reserves
worth $1.6 billion at the end of June. Currently it has a around
$1.2 billion.

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20010604
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A chance to break away from zero sum game
-------------------------------------------------------------------
By Qazi Alimullah

Since mid-nineties annual budgets have been a zero-sum game for the
economy and a losing game for the people. According to the Economic
Survey 1999-2000,(Table 3.1), the growth in the GDP, having dived
to 2.27 per cent in 1992 - 93 from the previous year's level of
7.71 per cent due to extensive devastation by floods in 1992,
resurged to 4.51 per cent in 1993 - 94, to 5.26 per cent in 1994 -
95 and to 6.76 per cent in 1995 -96.

Unfortunately, this growth trend could not be maintained in the
second half of nineties because of overwhelming reliance on
development and operation and maintenance expenditure cuts for
fiscal correction committed to the IMF and the World Bank as a
result of repeated failure, by successive governments, to extend
GST to retail stage and to provide institutional arrangements to
deal with the massive problem of tax avoidance and evasion and
related corruption.

The overall fiscal deficit or in other words,. net additional debt
burden because of the budget, was brought down from 8 per cent of
GDP in 1992-93 to 5.9 per cent of GDP in 1993 - 94, an
unprecedented reduction of 2.1 per cent unbeaten so far, and then
further down to 5.6 per cent of GDP in 94-95. Thereafter, the net
additional borrowing for the budget reached new heights of 7.7 per
cent of GDP in 1997 - 98, much before the post-nuclear economic
sanctions.

Thanks to improved revenue collections by the present regime, it
declined to 6.1 per cent in 1999-2000 and is expected to go down
further to 5.3 per cent of GDP in the current fiscal year against a
target of 4.5 per cent of GDP.

As regards the external sector of the economy, though the gains
were fragile due to chronic structural problems, it was able to
service all its payments obligation in the first half of nineties
without any extraordinary measures, thus maintaining the confidence
of foreign investors.

The exports at $ 6.1 billion in 1990-91, recovered from the
aftermath of 1992 floods and moved up to $ 8.1 billion in 1994-95
and $ 8.7 billion in 1995-96. As a result of erratic exchange rates
policy adopted by the State Bank in which real exchange rate
appreciation was accumulated of and on and then shed repeatedly in
large quantum. As a consequence exports, remittances and domestic
economy received severe jolts.

In the second half of the nineties, exports had a poor showing and
dived to new low of $ 7 billion by the year 1999-2000. Thanks to
cheaper cotton-led revival of the textile sector, steady
depreciation of Pak-rupee and above all the efforts of the
energetic and imaginative industrialist running the ministry of
commerce and industries, the exports in the current fiscal year are
expected to surpass the mid-nineties record of $ 8.7 billion by a
substantial margin of $ 300 - 400 million.

This is the only growth we shall be seeing in five years. Cash
foreign exchange reserves which were $ 604 million at the end June
1993, dipped to $ 300 in July but during the course of the year
soared to $ 2.5 billion, the accretion was way beyond the accretion
in short term liabilities including foreign currency deposits. At
end June 1995, the reserves further escalated to $ 2.9 billion. In
the later half of nineties the reserve position was, if any thing,
precarious despite rescheduling and assistance from IFIs. For the
last 3 years, the State Bank has been purchasing on an average
about $ 1.5 billion from the open market to meet the requirements
of formal trade and payments system.

Thus it is quite clear that as far as the economy is concerned the
budgets in the second half of nineties were a zero-sum game. Indeed
for the people, this was a losing game. According to a presentation
by the incumbent Deputy Chairman on poverty reduction strategy in
the national high level forum on poverty reduction program (2001 -
04) head count poverty ratio for urban areas was lowest ever in
1993-94 at 16 per cent. The rural poverty ratio was at its lowest
in 1992-93 at 23 per cent. The overall poverty ratio was lowest in
1992-93 at 20 per cent.

Rural poverty was adversely affected by flood, phasing out of
agricultural input subsidies and a sharp decline in home
remittances.

Since 1994-95 there was a sharp rise in all the three ratios till
they all converged at 30 per cent in 1999-2000. The urban poor got
a raw deal. Poverty aggravation was sharp in their case. Fiscal
correction affected them most. Every government during the period
had at the top of their national agenda the tax reforms, and, in
particular, the extension of sales tax at the retail stage. It has
remained a dream of the last millennium.

On the other hand, the pressure remained on them to cut down fiscal
deficit with its all pervasive destabilising effect on the economy.
The result was another unkind cut for the poor. The development
spending underwent a drastic cut down to less than 3 per cent in
2000-01. The ministry of finance treated it as a residual item for
adjustment of recurrent shortfalls in revenue. Consequently there
has also been a squeeze on asset creation for the people as well as
the quality of service to them.

I have reviewed the performance of the nineties in some details to
put the problems inherited by the present regime in sharp focus and
to correlate the expectations from the next budget to them. To sum
up, Pakistani economy is still in crisis. Due to drought, growth in
the GDP this year is not expected to rise beyond 3 per cent.
Overall fiscal deficit is not expected to go below 5per cent, a
magical figure defying all efforts in the past.

Trade deficit has improved but foreign exchange reserve position is
still difficult. Having come down to 4 per cent last year,
inflation rate has re-escalated to 5 per cent. National saving at
13 per cent is far too short of real investment requirements to
generate a GDP growth of over 4 per cent.

All this is a doing of many decades, in particular the eighties and
the nineties. After the second oil crisis in 1979 many developing
economies were severely affected and fell into debt trap. Many of
them including the ASEAN and Latin American countries responded by
structural reforms and they overcame their difficulties. India and
Bangladesh started late but they were able to revitalize their
economies in early nineties.

Pakistan initiated its structural reforms in 1980 but abandoned the
program in 1982 after initial success. The country was getting home
remittances of $ 3 billion annually. After Afghanistan's occupation
by USSR, Pakistan became a front-line state and therefore got
generous assistance from the US and its allies. Having accumulated
foreign exchange reserves of $ 2 billion by December 1982, there
was no pressure for reforms. There was no compulsion on fiscal
deficit. The entire emphasis was on growth at high future costs.
During eighties cumulative borrowing for the budget aggregated to
about 60 per cent of the GDP sowing the seeds of serious macro
instability in the nineties, in particular the later half.

Intermittent efforts for structural reforms brought some relief in
the first half that camouflaged the emerging crisis.

The present government took over a crisis ridden economy in October
1999. It presented a seven-point national agenda of economic
stabilisation, good governance and institutional reforms. Revival
of economy and its stabilisation was one of the most important
items of the agenda. The new regime proceeded on systematic basis.
An economic advisory board was constituted with a host of subject
specialists task forces to make recommendations to the board and
through them to the government. Based on these recommendations and
deliberations in the board a plan of action was developed which was
approved by the government for implementation through the next
budget for 2000-01.

Fiscal reforms proposed in the budget were documentation of the
economy, tax surveys and introduction of GST at retail stage. The
most crucial item was introduction of GST at all levels of value
addition on which hinged the future viability of fiscal balance.
More importantly the gap in the chain of GST at retail stage was
causing serious setback to small and medium enterprises (SMEs)and
exporters. SMEs generally purchase their raw materials from the
domestic market. While the price includes a mark-up on cost plus
GST paid by retailers to manufacturers and importers, SME producers
and exporters do not get a receipt for the GST element included in
the price with a mark up. Hence they cannot claim credit in their
own GST returns. Private limited companies are at a further loss.
They are supposed to deduct GST at source from unregistered
suppliers.

The suppliers refuse to accept this deduction and these companies
have to bear an additional cost which makes them more uncompetitive
because they cannot claim a credit for this additional payment.

This is one of the reasons why SMEs have not so far played decisive
role in export development. Though the retailers are recovering the
element of GST with a mark up from their consumers, they resisted
attempts for enforcement of GST and engaged the government in
procrastinating discussions. The government has declared that it
would start enforcing GST at retail stage in May 2001, a little too
late considering the setback to fiscal system caused by the delay.

Another important program of tax survey underwent a number of
revisions and dilutions by the government. To his credit, the
finance minister replied that he had to take into account the
"ground realities", which is an euphemism for last ditch efforts by
traditional tax evaders, avoiders and hijackers to stall the bold
initiatives on far reaching fiscal reforms. Collection and fiscal
deficit reduction have been missed and development expenditure
further squeezed. Additionally, the severe drought and water
shortage have depressed the growth rate once again to less than 3
per cent and investment in the economy by the present government.
Next year's budget will be the last one that will be implemented by
the present government. It must take decisive steps to consolidate
and further the initial gains.

People of Pakistan have lot of expectations from a government that
claims credit for integrity, decisiveness and the wisdom to
determine what is best for the nation. This in not the time to
contest these claims but to trust them while they are in power and
then evaluate their performance on the basis of results. Problems
arising out of national indebtedness will take a long time to be
resolved. The issue on which the performance will be judged, is the
needed space in the fiscal system to (i) support orderly growth at
a rate that creates substantial additional employment, and makes
significant dent on poverty, and (ii) reduces fiscal deficit in the
next two budgets to restart the process of unmanageable growth in
debt burden. That will bring social and economic stability. This is
the best time to do this. * Thanks to their initial efforts, there
is popular understanding and support for tax and credit compliance.
The finance minister has made too much allowance for ground
realities. Now is the time to do justice with objective realities.
Ground realities must be catered for but the objective reality is
that the people who are occupying the ground, have created for
themselves a tax haven and, have in the past resisted and
threatened all attempts to enforce GST at retail stage, which is
sine qua non for documentation of the economy and enforcement of
data-based self-policed system of assessment of taxes replacing a
system based on collusion, arbitrary assessment evasion and
corruption.

Notwithstanding the criticism from some quarters on dilution of
some of the measures, and excessive attention to ground realities,
so far finance minister has proceeded in a systematic and concerted
manner on all fronts including legal, institutional and
operational. He has now available with him the report of tax
administration reform committee, which has proposed complete self
assessment system, abolition of discretionary powers, market-based
pay structures, induction of private sector professionals at top
positions and assurance of a reasonable tenure and independence for
the chairman. On the operational side, substantial work has been
done on tax survey and preparations have been made for full
enforcement of GST.

It is expected the next budget would embody all the reforms to
create the needed space in the fiscal system, and achieve the
objectives, eloquently stated by the finance minister off and on.
Now is the time for the final act through the Budget 2001-2002. The
budget for 2002-2003 could be used for debugging the newly created
systems and consolidating the gains of these reforms.

Another issue that has to be dealt with effectively for long term
gains is poverty alleviation. Poverty has sharply escalated in the
last six years. It should not therefore, be difficult to reverse
the trend. Indeed, the government has taken a number of measures as
direct intervention. However, at last these can be described as
interim relief. These measures include development works under
Khushhali programme, establishment of Khushhali bank, food
assistance program and zakat financed package of social security
assistance. However, sustainable poverty alleviation can be
achieved through sustained growth in the economy. The average
growth between 1996-97 and 2000-01 has not been more than 3 per
cent. This rate of growth will aggravate poverty causing
disillusionment and disenchantment with the system of governance.
Indeed the government can rightly claim credit for institutional
reforms, cleaning up of the systems but, these fine values are not
understood by the poor.

They see the growing monster of poverty devouring them. Poverty
issue can be resolved only through higher investments both in the
public and private sector. * One can argue that in the current year
the growth has been low because of drought. Climatic disasters have
wrecked the economy time and again. This shows the vulnerability of
the economy. Higher investments are needed to diversify the economy
and stabilize growth. However, public sector investment has been
our weakest area, both in terms of quantity and quality of
implementation in particular during the last five years.

The budget makers have treated development expenditure as a
residual item. It has received low allocations to be put to further
squeeze to accommodate recurrent shortfalls in revenue. Actual
development expenditure during the last 5 years has seldom been
higher than the insignificant 3 per cent of GDP. If there is
throwing up an average of 3 per cent growth in GDP, we should
consider ourselves lucky. This is the time for us to break away
from the zero-sum game started in mid-nineties. It is unfortunate
that the APCC considers Rs 137 billion as minimum development
expenditure for achieving 4 per cent growth but finance ministry is
turning its back with an offer of only Rs 120 billion. It should
not be difficult to find another Rs 15 billion from Rs 600 billion
target. After all, fiscal correction is not an end in itself. It is
means to an end- the march towards prosperity for all.

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20010604
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Pakistan's haemorrhaging state
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By Khurram Dastgir Khan

The Pakistani state has historically failed to curb its
expenditures in line with its revenues. The state runs a chronic
fiscal deficit. The shortfall was Rs. 206 billion in the fiscal
year 1999-2000 (FY'00).

It is to cover this shortfall that our governments have borrowed
both domestically and internationally. But the spending pattern
does not change. The federal and provincial governments of Pakistan
spent a total of Rs. 743.6 billion in FY'00. This huge amount
failed utterly to improve the lives of most Pakistanis, and similar
amounts in previous years came to the same sorry end. Delivery of
basic services did not improve, and the fundamental duties of the
state-law and order, justice, economic policy-remained mired in
dysfunction. By all appearances, the Rs. 770.7 billion expected to
be spent in the current fiscal year has gone to the same bottomless
black hole that sucked all government expenditure in the past.

The question that must be asked is: where did the money go?

The federal current expenditure in 1999-2000 by items in a
descending order is as follows: (in billions of rupees).

1. Repayment of interest on domestic debt-183.9

2. Defence-143.4

3. Repayment of principal and interest on foreign debt-129.7

4. Grants and subventions-41.0

5. Development-19.7

6. General administration-19.5

7. Subsidies-14.4

8. Social services-10.3

9. Law and order-9.1

10. Community services-6.3

11. Unallocable-5.1

12. Economic services-2.1

Source: State Bank of Pakistan: Annual Report 1999-2000

The debt: There is a surprise at the outset. Debt servicing is the
largest single item of the state's current expenditure, and it is
assumed that the debt being serviced is foreign debt. A glance at
the FY'00 statistics shows that domestic debt is the largest single
item of state expenditure, and not foreign debt. FY'00 was the
first in which the rupee value of the state's domestic debt
exceeded its foreign debt: Rs. 1558.8 billion principal was owed to
domestic investors as compared to Rs. 1536.7 billion to
international lenders. Within domestic debt, the share of short-
term, high-interest floating and unfunded debt has been rising
without respite in recent years, and currently stands at an
alarming 85 per cent.

The recent government report on debt management by the Pervez Hasan
committee dismisses domestic debt as a problem. This attitude
conforms to half a century of economic illiteracy and profligacy at
the finance ministry, whose motto can be summarized readily: when
in trouble, print money. But the finance ministry cannot print US
dollars, and this is the reason that foreign debt has overwhelmed
Pakistan's all other fiscal issues. Our foreign debt in FY'00 was
more than half as large as the value of all goods and services
produced in the economy that year, and equal to $ 32.746 billion
with additional foreign exchange liabilities of $ 4.558 billion.
Foreign loans require an annual repayment of $ 7.8 billion in
principal and interest; an amount nearly equal to Pakistan's
realized export earnings. The core of our foreign debt 'problem' is
this: if Pakistan makes the repayment instalments in full, it would
not have any foreign exchange left over for any imports. Pakistan,
therefore, has to beg its creditors perennially for rescheduling of
debts-a gambit that merely muffles the knell of bankruptcy, and is
manifestly not a sustainable option.

The Pervez Hasan debt-management committee report is a flimsy
structure, built on rickety pillars dug not in the ground
realities, but in the quicksand of optimistic assumptions. It
exposes its intellectual bankruptcy when as a solution to
Pakistan's debt-management problem, it recommends taking on even
more foreign debt, to the tune of $7 billion per year. It assumes
that international donors will not only come up with these sizable
loans, but will also do so on soft terms. Presently, these donors
are making Pakistan grovel for a few hundred million, and justly
complain about the neglect of poverty alleviation, delivery of
basic services, and environmental protection in the state's list of
priorities.

One question that the debt-management committee ignored as being
outside its purview is in fact the bedrock issue for the nation's
fiscal future: whether the Pakistani state will be able to
reorganize itself to collect revenue and deliver services
efficiently? Reduction in domestic and foreign debt is necessarily
a long-term enterprise that requires steady commitment and sage
policy from successive governments. The present evidence indicates
a firm negative answer. In all its sprawling functions, the
Pakistani state is simply incapable of undertaking and promoting
collective action effectively.

Defence: Defence expenditure is an enigma. It has appeared
customarily as a single-line item in government budgets. Pioneering
research by Dr. Ayesha Siddiqa Agha has, however, unravelled a few
strands. In her recent monograph "Pakistan's Arms Procurement and
Military Build-up 1979-1999", she estimates that approximately 30
per cent of defence budget is wasted, and blames "wasteful imports
such as cars and other luxury items for senior officers,
duplication of activities, and corruption... Financial corruption
was ingrained in the system owing to lack of transparency in the
policy-making process and the influence of military's top brass in
decision-making."

Dr Agha provides four crucial insights into Pakistan's defence
expenditure: 1) on many occasions, weapons have been financed from
funds not allocated to the defence budget, a reference to the
nuclear program; 2) the armed forces have internal auditing
structure, but for all intents and purposes they are accountable to
no outside agency. They routinely deny needed documents to the
Auditor General, so that their audit is never completed; 3)
contrary to its claims, the military does not have foolproof
institutional checks against corruption; and 4) the military's
contract-management and cost-accounting system are inadequate.

The military's budget also finances its substantial commercial
activities, especially the Fauji Foundation and the weapon
factories. Operations of ordnance factories are cloaked in secrecy,
but some information is available on the Fauji Foundation. This
vast, Rs. 9 billion industrial conglomerates haemorrhages Rs. 1.2
billion annually, and its losses were tripled in the last six
months by the massive Rs. 2.4 billion loss in the FFC Jordan
Fertiliser Company alone. The Fauji Foundation does valuable
welfare work, but its industrial operations have been beneficiaries
of massive subsidies and exemptions by the exchequer. Until 1992,
it was exempt from taxes, and even now pays only marginal taxes.
The utilities and some of overhead costs of Fauji Foundation
operations are met from the defence budget.

Two more facts about defence expenditure are worth noting: 1)
Despite spending an average of Rs. 141.2 billion annually in the
last half decade, various sections of the armed forces owe more
than Rs. 3.7 billion to WAPDA in back dues. 2) The budget figures
for current FY 2000-01 showing a reduction in defence expenditure
are misleading. As the State Bank admitted in its most recent
annual report, "The reduction of Rs. 9.9 billion in defence
expenditures is due to the shift of military pensions (of Rs. 26.1
billion) to general administration. If it is shifted back to the
defence budget to keep the figure comparable with the previous
year, defence spending actually rises by Rs. 16.2 billion."

Development expenditure: The aggregate federal expenditure on
development, social services, law and order, community services,
and economic services was Rs. 50.5 billion in FY'00, or slightly
more than one-third of the annual defence expenditure. This
expenditure is insignificant compared to the need. The numbers are
appalling. The most recent figures released by the World Bank show
that 34 per cent of Pakistani citizens live below the absolute
poverty level, and 85 per cent of Pakistan's population subsists on
less than $ 2 a day. Of children of age 5 and below, 38 per cent
suffer from chronic malnutrition. And almost two out of every three
Pakistani adults above age 15 are illiterate.

The tragedy is that even this negligibly small expenditure is
embezzled, misused, and lost in red-tape. The provincial
development budgets are gobbled up by salaries of workers. To
present just a few facets of this continuing calamity: $ 400
million was embezzled from Social Action Program (SAP); $ 17
million in SAP funds is lying unused; the Punjab government has
failed to spend even half of its development expenditure in FY'01;
and the Asian Development Bank (ADB) has threatened to cancel 44
projects worth $ 667 million because of quality and pace of
implementation.

The development budget ends up ultimately in the same place all
government expenditures repose-in the pockets of greedy
manipulators, state employees and contractors alike. And there is
no reasonable estimate of losses due to inefficiency. Dr Agha's
estimate of 30 per cent waste in defence expenditure gives us a
conservative baseline of waste in the development budget also: a
staggering Rs 5.9 billion out of the total of Rs. 19.7 billion in
FY'00. The actual figure is likely to be much higher, but this
careful wastage estimate alone is one-sixth of what the IMF
promised to loan Pakistan under its harsh stand-by facility last
November.

Other expenditures: The Rs. 41 billion "grants and subventions"
head might as well be renamed "inefficiency and corruption", and is
ripe for ruthless downsizing. This is the cash cow for departments
of state e.g., WAPDA and railways, who always obtain annual grants
to hide and continue their graft-infested and inept ways. The way
out is evident, but disagreeable to our policy-makers: to radically
reform, downsize, privatise, and reinvent these corporations so
they are financially self-sustaining and fully accountable to their
consumers.

What justifies Rs. 14.4 billion in subsidies in the last FY? The
hit-and-miss and arbitrary process of policy formulation by SROs
ensures that subsidies persist far beyond their original
justification, and new subsidies are added because they are a ready
source of corruption for recipients and dispensers alike. Most of
the current subsidies are economically unjustifiable, as they
distort prices and primarily help the affluent.

The total general administration expenditure of the federal
government in 2000 was about the same as its total development
expenditure. This is a damning demonstration of the Pakistani
state's distorted priorities. This head has an impact many times
its rupee value, as its bad practices ripple through the economy
and cause massive inefficiency, not to mention corruption. Given
the pervasive dysfunction of the Pakistani state, the massively
over-employed general administration can be cut substantially
without any apparent loss in performance.

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20010603
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Package for investors on cards: Budget 2001-02
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By Ihtashamul Haque

ISLAMABAD, June 2: The government has decided to offer new
concessions to foreign and domestic investors in the budget 2001-
2002. Foreign investment, which is an important yardstick for
overall GDP growth rate, has been less than $100 million during the
first ten months of 2001-2002. Although promises were made and the
Memorandums of Understanding (MoUs) signed, specially in the
Information Technology (IT) sector, practically there was no hard
foreign investment.

The sources said a comprehensive package was being worked out by
the budget planners, which would protect foreign investment. The
government in this regard will promulgate an ordinance. Finance
Minister Shaukat Aziz told this correspondent on Friday that the
government would not commit a blunder of freezing foreign currency
accounts.

The sources said the government was expecting 2 to 3 billion dollar
new foreign investment by overseas Pakistanis in 2001-2002 by
making what was termed a "big favor" of asking no question about
the source of the amount. On the domestic front, the government was
considering 10 to 15 per cent reduction in excise duty on cement to
encourage the dormant construction industry. The move, the sources
said, could help bring sizeable domestic investment in this big
sector.

"The excise duty on a number of items is likely to be removed and
general sale tax imposed on them," he said. The removal of excise
duty on different kinds of imported raw material was also being
contemplated. Another budget issue, he said, causing differences
between the ministry of finance and the Planning Commission was the
size of the Public Sector Development Program (PSDP). The
Commission continued to insist that this development budget should
be to the tune of Rs 130 billion while the finance ministry
officials were just unprepared to make available more than Rs120
billion in this behalf. The matter will be discussed and finalized
at the National Economic Council (NEC) meeting being held on June 7
under the chairmanship of Chief Executive Gen. Pervez Musharraf.

The sources said that further reduction in the interest rate of
commercial banks and national saving schemes was also being worked
out in the next budget. The International Monetary Fund (IMF) was
particularly insisting on lowering the interest rates of banks and
the saving schemes.

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20010603
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29.4% growth in ST collection noted
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By Parvaiz Ishfaq Rana

KARACHI, June 2: There had been sustained growth of 29.40 per cent
in sales tax collection during the first 10 months (July-May) of
present fiscal. The closer monitoring of accounts of taxpayers by
audit department of ST collectorates minimized leakage’s and
evasion to a greater extent, sources maintained. The sales tax
collection of both collectorates during the out-going month of May
rose to Rs2.080 billion as against Rs1.848 billion in the
corresponding period of last year.

As per other details the Sales Tax Collectorate (East), during the
period under review, maintained its robust growth in sales tax
collection at Rs19.515 billion or 35.24 higher than the collection
made during the corresponding period of last year when Rs14.429
billion were collected. During the out-going month of May the
collectorate recorded a growth of 14.53 per cent at Rs1.640 billion
compared to Rs1.431 billion collection achieved in the same period
of last fiscal. However, a single month record collection by the
collectorate (East) was achieved in July, 2000, when ST collection
at Rs1.608 billion was 162 per cent higher than the corresponding
period of last year.

The ST collectorate (West), also maintained its growth by improving
12.17 per cent in its collection over the previous year. During the
period under review there had been a collection of Rs5.488 billion
as against Rs4.892 billion a year ago. A single month record
collection by the collectorate (West) was achieved in August 2000,
by recording a growth of 69.35 per cent at Rs578.012 million
compared to Rs341.300 million collection made in the same period of
previous year.

Back to the top
EDITORIALS & FEATURES
20010603
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Forty-five days' liberty lost
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By Ardeshir Cowasjee

MARCH 28, 2001: Notice received by Navroze Patel. Case No.100/98
FIR NO.58/98, FIA, CBC, KYC. In the Special Court (Offences in
Banks) at Karachi, Sindh, at old Circuit House Adjacent to American
Consulate Karachi (Criminal Jurisdiction) XXXI Summons to witnesses
(See Section 69 252). Addressed to N S Patel s/o Savak Behramji
Patel, chief cashier ANZ, Allama Iqbal Road Branch KYC, R/o 3 Lodha
Homes, Parsi Panchayat Wadi, Johar Street, KYC.

"Whereas complaint has been made before me that Wilayat Noor Khan
u/s 406/PPC has (or is suspected to have) committed the offences of
and it appears to me that you are likely to give material evidence
for the prosecution. You are hereby summoned to appear before this
court on the 2nd day of April 2001 at 8.30 am in the forenoon, to
testify what you know concerning the matter of the court, and you
are hereby warned that if you shall without just excuse neglect or
refuse to appear on the said date a warrant will be issued to
compel your attendance. Given under my hand the Seal of the Court
this 10th day of March 2001. By Order."

April 2, 2001: For the first time in his life, Navroze Patel
entered a courthouse. He appeared before Judge Ekram Hussain Jafri.
He was appalled by what he saw and heard. His idea of a court was
what he had seen on his television screen whilst watching Perry
Mason defending a client. The others concerned and called were not
present. The case was adjourned to May 14, 2001.

April 11, 2001 : An FIA man, Rafiq Moghal, the investigating
officer of the case, appeared at Navroze's home and asked him to
accompany him to the FIA office, without specifying why. On arrival
there, at Baloch Colony, he was told that he had been arrested and
he was put in the lock-up. He was kept overnight. The following
morning he was allowed to make a telephone call, which he did to a
friend and neighbour, also working in ANZ Grindlays, and informed
him that he was being held by the FIA.

Thereafter, he was handcuffed and taken to the court of judge
Jafri. In court, Rafiq Moghal of the FIA had a conversation with
the judge which Navroze was unable to hear. What he did hear was
the judge ordering that he be remanded and sent to Karachi Central
Prison and produced again in his court on April 25.

April 25, 2001: He was not taken to court.

I visited him that day in jail and was amazed to find him calm and
composed, not at all worried by what was happening to him. He
turned out to be an Old Virbaijeeite, a former student of the Bai
Virbaijee Sopariwalla Parsi High School from where he had
matriculated in 1970. The principal during his school years was Mrs
Dinoo Mistri and he was sent out into the world and told : This is
your world, go and live in it.

We sat down and he related to me the chain of events which had
brought him to prison. On May 29, 1998, the day after Mian Mohammad
Nawaz Sharif exploded the Bomb, the cashiers in his bank were
instructed to transfer all the foreign currency notes they held to
the chief cashier, Navroze. Whilst handing in his currency notes,
one cashier, Wilayat Noor Khan, was $ 20,000 short of what he
should have had and this was duly recorded and reported to the
branch manager. In August 1998, the bank lodged an FIR against
Wilayat Noor Khan in which Navroze's name did not figure.

I checked with the bossman of Standard Chartered Grindlays (ANZ has
since been bought over) who unequivocally certified "that Mr
Navroze Z. Patel was with ANZ Grindlays Bank from June 16, 1975, to
November 15, 1999. In 1999, he opted for the voluntary retirement
scheme. At this time he was working in the capacity of assistant
manager, sales and service, cash department, at the Allama Iqbal
Road Branch based at Karachi. During his tenure with us, we found
him honest, hard-working, and efficient. We have not had nor have
any claim or charge against him. We wish him success in his future
endeavours." The bank also gave me a photocopy of the letter which
teller Wilayat N. Khan had written to his ANZ manager on June 2,
1998 : "Subject - Loss of $ 20,000. I would like to inform you that
it has been noted on 2nd June, 1998, at about 5 pm while delivering
my foreign currency cash to my chief cashier that $ 20,000 was
missing from my teller box."

Artist and social worker Jimmy Engineer, a neighbour of Navroze and
a member of the helping gang, asked his friend, famous criminal
lawyer Khwaja Naveed, to apply for bail.

April 26, 2001: Khwaja Naveed appeared before judge Jafri who
informed him that he had no time to hear the bail application and
adjourned the matter to May 15.

I was not at all surprised by the behaviour of the judge and his
concern for the liberty of his fellow man. I asked Khwaja to
request Judge Jafri to reject the bail application which would
enable us to move on to the High Court. Jafri refused, but ordered
that the bail application hearing be brought forward to May 5.

May 5, 2001: Navroze was taken to court handcuffed to another man
under trial. The FIA man had no objection to the grant of bail.
Judge Jafri rejected the bail application.

May 14, 2001: Navroze was taken to court, this time handcuffed to
two others undergoing trial. The case against Wilayat was not
heard. It was adjourned to May 30.

May 18, 2001: Khwaja Naveed had managed to fix a bail hearing at
the Sindh High Court. It came up for hearing but no FIA man was
present, so the hearing was adjourned to May 22.

May 22, 2001: The presiding High Court judge, realizing the
importance of a bail application and concerned about the liberty of
his fellow man, granted bail. The court decided that Navroze would
have to provide security for an amount which happened to be half
the sum of his golden handshake.

May 25, 2001: Navroze was released from Karachi Central Prison. It
had taken Jimmy Engineer and his helpers three days and much
hassling to get the paperwork done and they had to pay far more
than the official fees to do so.

July 4, 2001: American Independence Day, when we will all remember
the famous words: Life, liberty and the pursuit of happiness. The
case against Wilayat is to be heard in judge Jafri's banking court
and Navroze will have to appear.

Who will pay, and what can they pay, for the loss of 45 days of
liberty in the life of Navroze Patel, for his suffering and
bewilderment? I can make no comment for at present I myself still
have against me a charge of contempt of court.

In 1999, the then Chief Justice of Pakistan, having been alerted by
one of his learned brothers that my utterances on PTV were prima
facie contempt of court, summoned me to the Supreme Court to show
cause why I should not be proceeded against for contempt of court.
I duly appeared before a bench of 14 honorable judges of the
Supreme Court of Pakistan, headed by the Chief Justice, and on
October 26, 1999, was formally charged by them with "having
committed contempt of this Court and the High Courts of the Country
and rendered myself liable to punishment under Article 204 of the
Constitution of the Islamic Republic of Pakistan read with sections
3 and 4 of the Contempt of Court Act 1976". I was called upon to
show cause why I should not be punished and was asked if I pleaded
guilty. My response was: No.

The hearing of the case was fixed for December 13, 1999. An
adjournment was sought as I had, as is always said in Pakistan,
'rushed' to the States for treatment for my chronic heart problem
and in fact on that day was lying in the George Washington Hospital
in Washington DC. The case was adjourned to the first week of March
2000, by which time I expected to be back in Pakistan.

The case has still to be fixed, heard, and disposed of.

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20010608
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Educating the warriors
-------------------------------------------------------------------
By Ayaz Amir

The warriors were not amused. This was plain to see. Their faces
wore glum looks; the desk-thumping when it came was conspicuously
half-hearted. Any other speaker in the like situation would have
been cut short, the podium stormed, the mikes seized, and the man
sent running for his life.

But this was no ordinary speaker. Here was the commander of all of
Pakistan's armies, and its nuclear forces to boot, giving the
fathers of the church a taste of their own medicine. They were not
liking it at all, neither his audacity nor their own helplessness.

The annual Seerat Conference in Islamabad on the Holy Prophet's
birthday is not a setting for dramatic happenings. Speeches
delivered on the occasion are of the predictable kind and therefore
easily forgotten. But when I accidentally tuned into the live
recording of the event on PTV I sat transfixed. For there was
General Musharraf uttering no homilies or pieties but talking
serious business.

His message was simple if also a trifle blunt: start living in the
real world. And the more effective for being plain and direct with
no frills or oratorical flourishes.

Here's a precis (not a literal rendering) of what he said. Why did
the sectarian fathers squabble amongst themselves? First it was
Sunnis and Shias at loggerheads with each other, now another
variation had crept in: Barelvis vs Deobandis. A man's faith was
his own affair. In such matters what right had anyone to sit in
judgement over others? This was God's prerogative, not that of
mortals.

How could we call ours an Islamic state? In it was no brotherhood,
unity or tolerance. Nor justice for the poor and needy. We cited
with pride the exalted place given to women in Islam. But the facts
on the ground told a different story. We were hypocrites. What lay
in our hearts came not on our lips.

By speaking irresponsibly we gave a handle to others to malign us.
Little wonder Pakistan was called all manner of things: failed
state, terrorist state. We should learn to relate our utterances to
our strength. We were a weak country, left behind in the race for
development. While there was no question of discarding principles,
it was not wise to speak intemperately. Let us first acquire
strength. Then, if we wanted to, we could abuse others to our
hearts' content. What need to talk of planting the banner of Islam
on the Red Fort in Delhi? Did we not realize the difficulty we thus
caused our brethren-in-faith across the border? We were committed
to the Kashmir cause and would advance it in whatever way we could.
But it was also a fact that a lot of the money collected for
Kashmir went into private pockets.

Our economy was not in sync with our military strength. Japan's GDP
was four times the size of the GDP of the entire Muslim world;
Germany's was two times bigger. Wherein lay the fault? We lagged
behind in human development (at which point the CE compared figures
of universities and Ph.Ds in other countries and those in the
Muslim world). Precis ends.

Newspaper reporting can often be misleading, conveying the outer
impression of an event while leaving its essence untouched. So it
can be with General Musharraf's speech. Mr Vajpayee has already
welcomed it, a circumstance which almost ensures that it will be
read in the context of India-Pakistan relations whereas to isolate
it thus is to give it a wrong meaning.

High-flying rhetoric, tall claims, bigotry and intolerance are not
specific to the warriors of the faith. To assume as much is to do
the holy warriors an injustice. These things are true of Pakistan
as a whole. As a nation are we not victims of inflated rhetoric?
Intolerance, militancy and sectarianism may be the special wares
hawked by the fathers of the faith but jingoism, militarism and
nuke-brandishing are follies that can be laid more appropriately at
the doors of the permanent establishment: the generals and
mandarins who sit at the high table of national security.

General Musharraf not only sits at this table; he presides over it.
But notice the irony of his performance. While he called attention
to the verbal excesses of the religious armies, he studiously
avoided any mention of the profligacy and practical excesses of the
permanent establishment. We should bring our economic strength up
to par with our military strength, he urged. But he was careful not
to say we might consider scaling down our military strength to
reflect more accurately our economic circumstances.

Other caveats can also be sounded. A leader cannot afford the
luxury of permanent diagnosis. In his position he must not only
point out the sickness; he must also do something about it. The
military government has now been in power for some time. What has
it done to improve law and order (a subject regarding which the CE
waxed eloquent)? What victories can it claim in the fight against
militant sectarianism? How has it improved the administrative
functioning of the Pakistani state?

If the military's record on these scores is uneven or unconvincing,
is it not proper to ensure that sermonizing not outstrip
performance? Reading a lesson in realism to the accredited barons
of the church may be the thing to do (they certainly deserve it).
But shouldn't there also be an element of humility and self-
criticism in the exercise?

In the coming days count on more such objections being heard. Even
so, it pays to remember that while discourse in the realm of
statecraft cannot be an end in itself, the right kind of discourse
can influence political behaviour and even raise it to a higher
level. Churchill's Iron Curtain speech helped define a critical
moment in post-war Europe. Eisenhower's "military-industrial
complex" speech drew attention to an important aspect of the modern
state (besides giving a revealing phrase to the language).

Far-fetched analogies are obviously misplaced but this much perhaps
can safely be hazarded: in such open terms no Pakistani leader
before has addressed the bugbear of national over-reach and
religious fanaticism. While military leaders are not above speaking
the language of hypocrisy - we need only remember the irrepressible
General Zia in this connection - only a military leader sure of
himself and not worried about his back could have spoken in these
terms. Only a military leader could have sacked the one-man public
relations firm that went by the name of A. Q. Khan. Only a military
leader could have called the fathers of the faith to account
without the windows being smashed and he being chased from the
hall.

This only goes to show the power of the army in a politically-
repressed and retarded country like Pakistan - the power to do good
and, as the history of the last 53 years amply illustrates, the
power to inflict evil.

In any event, this was a speech waiting to be delivered: a
necessary corrective to the nonsense which fills the national
atmosphere. In ladling out this corrective Musharraf also provided
a glimpse into his evolution as a leader. Not long ago his
government went about in mortal fear of the mullah. The fiasco over
the minor changes in the anti-blasphemy law, when a solemn word
given had hastily to be retracted, will not be forgotten in a
hurry. Nor will images of free-wheeling religious gatherings where
wild calls for jihad were made against the backdrop of gun-toting
bodyguards in masks and battle fatigues.

India could have asked for nothing better. We were proving more
adept at self-defamation than our enemies could have imagined. In
between came the comic relief provided by the antics of a small-
time cleric from my home district of Chakwal whose threats to march
on Islamabad were taken seriously by the authorities. To the
alarmed outsider, Pakistan seemed a ripe candidate for
Talibanisation.

Juxtaposed with those exaggerated fears when the military was still
testing its political strength, General Musharraf's present
boldness comes across as a giant leap. Indeed herein lies an irony
to beat all others. For the author of Kargil to become a leading
espouser of realism is a transformation, admittedly on a much
reduced scale, to set beside Nixon's journey from communist-baiting
to drawing the grand design of détente.

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20010609
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The short arm of the law
-------------------------------------------------------------------
By Irfan Husain

AS last week's successful strike called by the Sunni Tehrik showed
yet again, the state's writ does not extend much further than the
confines of Islamabad.

True, the city of Karachi came to a grinding halt purely out of
fear and not sympathy for the ST cause. But the fact that a
military government can do little more than haul up a few hundred
activists, only to release them as part of a deal with this
fundamentalist organization a couple of days later, indicates the
low esteem authority enjoys in Pakistan. When a quasi-religious
outfit can hold the nation's biggest city hostage without any fear
of official retribution, we are in serious trouble.

Over the years, corruption, inefficient government, political
bickering, military interventions and judicial somersaults have
steadily eroded the authority of the state. From such mundane,
everyday actions like stopping at a red light to paying taxes,
everything is subject to the individual's perception of what he can
get away with. And in today's Pakistan, he can literally get away
with murder. Even if our notoriously inefficient police make an
arrest, chances are that the suspect will be released by our
courts. Everything is open to negotiation, everything is up for
grabs.

Successive governments have attempted to impose sales tax across
the country, but each time, traders have successfully agitated to
get delays and exemptions. This government has been firmer than its
predecessors, but there are still huge gaps and loopholes in the
system. Electric meter inspectors who attempt to collect dues from
the tribal areas are often beaten up, and so far, WAPDA, the
utility company, has been unable to recover a penny from these
armed and dangerous worthies. Not coincidentally, these same
tribals are involved in smuggling, gunrunning and drug trafficking
on a massive scale. They pay no taxes, and yet remain immune from
any legal action.

But to be fair to them, they are not alone in being exempt from
prosecution for law-breaking. Every fortune in Pakistan has been
made by cutting corners; many opulent (and vulgar) houses and
shopping plazas across the country have been financed through some
racket or the other. Homes with half a dozen air-conditioners pay a
fraction of their energy bill by cutting a deal with the meter
readers; large and profitable businesses pay off officials on a
monthly basis to reduce duties, taxes and all kinds of other
levies. But they do not pass on their legitimate and illegitimate
profits to shareholders, preferring instead to fiddle the books to
siphon off the proceeds into offshore accounts.

To a considerable extent, officialdom is responsible for this state
of affairs: a factory owner in Karachi told me that his industry is
subject to the inspection of fourteen different federal and
provincial agencies, each of whom demands a set amount which, if it
isn't paid, can lead to extortionist fines and even closure. Most
industrialists find it easier and cheaper to pay up, charging these
bribes to the cost of doing business in Pakistan. Those few
businessmen who buck the system and insist on paying their legal
dues find their competitiveness being eroded through higher costs.

The state's own inability to enforce its writ leads it to squeeze
those who do pay and are subsidizing those who don't. Thus,
electricity rates keep gong up because of the extraordinarily high
rate of line losses and outright power theft; despite the army's
heavy involvement in WAPDA at every level, this white elephant
continues to haemorrhage money and megawatts. Similarly, because of
massive tax evasion, fixed-income earners who cannot avoid this
burden find themselves having to pay more every year to underwrite
the state's bloated expenditure.

When people see others getting away with all kinds of scams around
them, they start feeling like suckers being taken for a ride by a
system that is stacked against the honest individual. So it is hard
to blame them for taking short-cuts when they can. When
multimillionaires flaunt their dubious fortunes - usually built on
defaulted loans and evaded duties and taxes - the ordinary mortal
feels justified in diddling the state out of whatever he can.

Respect for the rule of law can only come when it is uniformly
applied. In Pakistan, only fools and ordinary citizens obey the
law; the privileged are above it. About fifteen years ago, a friend
told me a story that illustrates the general contempt for rules: he
had stopped at a red light and the car behind him started honking
incessantly. When the light turned green, he proceeded, only to be
blocked by the noisy driver who accelerated violently to overtake
him. He got out and proceeded to abuse my friend who lowered his
window to ask what the problem was. "Why did you stop at the
lights, you so and so?" the aggressive driver demanded. My friend
pointed out that the light was red. "Are you a government chamcha
that you stop at red lights?" was the next question.

One major reason why we are where we are is that the rich and the
powerful openly break the law without a second thought, and their
children follow their parents' example. President Bush's daughters
have been fined for under-age drinking; if memory serves, Ms Cherie
Blair, wife of the British prime minister, was fined when she
forgot to buy a train ticket; and several members of the British
royal family have been charged with speeding. But if a general's or
a senior official's son is caught for a crime, not only will he be
let off, but the arresting cop will be lucky to keep his job. After
a while, demoralized policemen will no longer stick their necks out
by apprehending the well-connected.

If the rule of law is to be enforced and the writ of the state is
to have any meaning, two things will have to happen. Firstly, laws
need to be rationalized and simplified; next, they have to be
uniformly applied without exception. Both steps need political will
that is currently not in great evidence. The ill-trained, underpaid
and demoralized bureaucracy as well as the venal and inefficient
lower courts are simply not capable of implementing any meaningful
reforms; nor are the Pakistani elites very likely to follow rules
made for the rabble. And since this government (or any foreseeable
one for that matter) shows no inclination to use its considerable
authority to take on powerful vested interests, nothing is likely
to change.

Around forty years ago, Ayub Khan, another military ruler,
introduced the Family Laws Ordinance, a very liberal piece of
legislation for its time. He took on the religious lobby and pushed
this pro-women law through. Since then, successive rulers, both
military an civilian, have capitulated before vested interests. But
if things don't change, we will continue being held hostage by any
two-bit outfit with a grouse.


SPORTS
20010609
-------------------------------------------------------------------
Pitch invasion mars Pakistan's victory
-------------------------------------------------------------------

BIRMINGHAM, June 8: Pakistan routed England by 108 runs at
Edgbaston on Thursday in the opening match of a triangular one-day
tournament on Thursday, but the contest was almost abandoned after
a pitch invasion threw the match into chaos just before the finish
(briefly reported in Friday's edition).

England, chasing Pakistan's 273 for six, were on 159 for nine in
the 44th over when hundreds of fans, the vast majority wearing
Pakistan colors, ran on to the ground, forcing the players off and
stealing the stumps as they swarmed all over the playing surface.

Pakistan captain Waqar Younis and team manager Yawar Saeed made
appeals to the team's fans, warning them the match would be
abandoned unless they moved back behind the boundary boards. The
pleas followed a meeting between match referee Brian Hastings, the
umpires and the two team captains.

Pakistan captain Waqar Younis helped to restore order by persuading
fans to go back in the stands. "Most of the crowd were Asian," he
said. "It was necessary for me to go out there."

Waqar played down the trouble, however, saying: "This is nothing
new for me. When you play in Pakistan and India this is quite
common. It's a shame but it happens. It's part of the game. "We do
really need some more security, (but) I don't know what they can
do. They can't really put up fences overnight." His opposite number
Alec Stewart retorted: "He (Waqar) might be used to it, but it
shouldn't be happening. I can't remember anything like that around
the world."

Waqar admitted that match referee Brian Hastings had considered
calling the game off after a meeting with the umpires and two
captains, and said the International Cricket Council, the sport's
governing body, could have been forced to intervene if the game had
not been finished.

The second game sees Pakistan take on Australia in Cardiff on
Saturday. Thursday's incidents were reminiscent of similar crowd
invasions during the 1999 World Cup, with extra security and army
personnel drafted in after several crowd invasions. England, who
accepted their status as the tournament's also-rans before a ball
was bowled, ended the game in disarray.

Their cause had not been helped by losing Andrew Caddick 24 hours
before the match and Graham Thorpe a few hours before the start,
leaving them short of five first-choice players. Their feeble
batting, however, followed two batting collapses in the second Test
ending on Monday, while their support bowling was again shown up as
short on both variety and teeth. Australia and Pakistan must
already have their thoughts on their Lord's rematch.

KNIGHT INJURED: Knight was hit by a spectator during a pitch
invasion, Stewart said. "He told me he was struck," Stewart told
reporters. "I don't know where." -Reuters

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20010608
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Pakistan beat England by 108 runs
-------------------------------------------------------------------
Monitoring Desk

BIRMINGHAM, England, June 7: England lost the first opening match
of triangular one-day series to Pakistan, when the visitors routed
the hosts by 108 runs, at Edgbaston on Thursday. Pakistan, who
opted to bat, had made 273 for six (opener Saeed Anwar's 77), his
40th half-century in one-day internationals, and Inzamam-ul-Haq's
79, his 60th.

In reply, England collapsed when their early wickets fell quickly
without adding sufficient score on the board.

At one stage they were 69 for 3. The combined attack by seamers and
spinners confined the English batsmen to a paltry 159 for nine on
42nd over when the enthusiastic spectators streaked the ground
stopping the match proceedings for quite some time. When the order
was restored and the match resumed finally, it took another three
overs to Pakistan bowlers to finish the match.

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20010607
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Rejuvenated Pakistan face England in tri-series opener today
-------------------------------------------------------------------

BIRMINGHAM, June 6: Australia, Pakistan and England all go into the
triangular one-day series that starts at Edgbaston here on Thursday
with a point to prove.

Australia, who beat Pakistan at Lord's in the 1999 World Cup final,
will want to extend their run of one-day successes and prove that
Tuesday's six-wicket defeat by Middlesex was no more than a blip.
Not since Australia captain Steve Waugh was a junior player in
1986-87 has his country lost a Test series campaign against
England, their oldest opponents.

Success in the one-day series would further erode England's
confidence about their ability to beat Australia in the longer
game. The home team's collective belief was dented Tuesday when
Pakistan took eight wickets in the final session at Old Trafford to
win the second Test. For England's part this marks the start of a
rebuilding programme in limited overs cricket. Their run of four
wins and a draw from their last five Test series has obscured the
fact that their one-day form has been poor.

They won the triangular tournament here last season but that was
against a fledgling Zimbabwe side and a West Indies team that was
one of the weakest to visit here since World War II. During the
winter England played six One-day Internationals and lost five on
the trot, including two to Pakistan before being thumped three-nil
in Sri Lanka, their last one-dayer ending in a 10-wicket win for
the Sri Lankans. If the 1999 World Cup was a disaster for England -
on home soil they went out in the group stages - the final was a
crushing disappointment for Pakistan.

At Lord's they were bowled out for 132, Australia winning by eight
wickets and allegations of match-fixing following almost as quickly
as Pakistan batsmen departing the field. Pakistan captain Waqar
Younis and fellow fast bowler Wasim Akram are making what seems
certain to be their final tour of England and they will want to
finish with a flourish.

The smart money says Australia and Pakistan will contest the final
again - both teams have greater numbers of bowlers and batsmen who
can turn a game in the blink of an eye than England. But smart
money is often wrong and England opening batsman Marcus Trescothick
- England captain Nasser Hussain is still out thanks to a thumb
fractured by Shoaib Akhtar in the first Test - insists Alec
Stewart's side can compete. "It's going to be hard work. You've
only got to go back to the 1999 World Cup when they were both in
the final. They are both very, very good sides, Australia in
particular," said the 25-year-old Somerset left-hander.

"Pakistan are not far behind but I'm sure we can overcome both of
them. "If we perform to our maximum we've got a good chance. It's a
big stepping stone. We've not done that well in One-day
Internationals so this is a great opportunity to turn it around as
we did with the Test matches." Time will tell if Trescothick's
optimism is well-founded. The final is at Lord's on Saturday, June
23.

Meanwhile, England's chances were dealt a blow on Wednesday when
pace bowler Caddick was ruled out of his team's opening two
matches. Coach Duncan Fletcher said: "He's got a niggle in his back
that's been hurting him. He's played through it before but because
of his workload we won't be looking at him until Lord's." Caddick,
who led the attack with Darren Gough in the Test series against
Pakistan, has been replaced in the squad by paceman Matthew
Hoggard.

Alec Stewart, stand-in captain for Nasser Hussain, said: "We will
probably start as third favourites the other two teams reached the
1999 World Cup final. "We're an inexperienced side - I've played
140 one-day games, while players like Steve and Mark Waugh and
Wasim Akram have played two or three times more than me." The host
side have included two young players, Surrey's Ben Hollioake and
Durham batsman Paul Collingwood, in their squad but Fletcher would
not commit himself to playing either inThursday's match.-AFP/
Reuters

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20010605
-------------------------------------------------------------------
Pakistan level series
-------------------------------------------------------------------

MANCHESTER (England), June 4: Pakistan, inspired by Saqlain
Mushtaq, Wasim Akram and Waqar Younis, snatched a 108-run victory
over England in a dramatic climax to the second Test at Old
Trafford on Monday.

England, chasing 370 to win, were 174 for one just before tea on
the fifth and final day but slumped to 261 all out as their hopes
of a fifth series win in a row were dashed. Wasim made the key
break though by removing centurion Marcus Trescothick before he
combined with off-spinner Saqlain in an extraordinary passage of
play as four wickets fell for one run in 13 balls, three of them to
Saqlain.

England plunged from 229 for four to 230 for eight in this telling
phase. Saqlain finished with four wickets, Wasim took two and
skipper Waqar had three, Pakistan winning with just 6.5 overs left
as their supporters invaded the pitch at the end. It was a
extraordinary turn-around after opening batsmen Trescothick, who
made 117, and Michael Atherton, who made 51, had put on 146 for
England's first wicket.-Reuters

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20010604
-------------------------------------------------------------------
Exciting final day on cards at Old Trafford
-------------------------------------------------------------------

MANCHESTER (England), June 3: England, set a record 370 to win the
second Test, saw off a fierce assault by Wasim Akram and Waqar
Younis as they raced to 85 without loss with a day left at Old
Trafford.

Left-arm pace bowler Wasim, playing in his final Test in England,
unleashed a barrage of bouncers and short-pitched deliveries in an
attempt to unsettle the openers in the last 22 overs of Sunday's
fourth day.

Michael Atherton, though, responded with two boundaries off the
first over while Marcus Trescothick joined in with a cover-driven
four off Waqar Younis, followed by a top-edged six over fine leg as
25 came off the first four overs. The scoring slowed with the
introduction of off-spinner Saqlain Mushtaq, who turned a ball from
the rough to beat left-hander Trescothick as he groped forward in
the gathering gloom. But Atherton, who closed on 30 not out, then
cracked him through extra cover before bringing up the 50 in 78
balls. Trescothick (48 not out) completed the day with two
boundaries off the last two balls from all-rounder Abdur Razzaq,
the second a full-blooded hook, leaving England needing 285 to
steal the game from a minimum of 90 overs on Monday.

England have never scored as many as 370 in a fourth innings to win
a Test. Their record came against Australia at Melbourne in 1928-29
when they scored 332 for seven. Their best fourth innings winning
total against Pakistan came in 1982, when they made 219 for seven
at Headingley.

Pakistan, however, will still feel well placed to level the two-
match series after Inzamam-ul-Haq and Yousuf Youhana shared a 141-
run fourth-wicket partnership to help them amass 323 in their
second innings. The fourth day, like the three preceding days,
provided enthralling cricket in front of a 15,000 crowd on an
excellent pitch still favouring the batsmen. Pakistan, resuming
their second innings on 87 for three after dismissing the home side
for 357 on Saturday, dominated the morning as they added 94 without
loss.

The home side, however, gave themselves a glimpse of a chance by
removing danger man Inzamam for 85 as four wickets fell for 37 runs
in the afternoon. Inzamam, chasing his second century of the game
after making 114 in the first innings to pass 5,000 test runs, had
looked set to attack after lunch. But, after a hooked six off
Andrew Caddick and a four in the same over, he chipped pace bowler
Matthew Hoggard straight to Trescothick at short mid-wicket.

Two balls later Youhana was controversially given out for 49,
caught at first slip off Caddick to make it 208 for five as a
short-pitched delivery appeared to clip his helmet rather than his
gloves on the way to Atherton at first slip.
Youhana, struggling for form throughout the tour, left shaking his
head in frustration. Dominic Cork then removed Younis Khan lbw for
17 and Caddick scattered Azhar Mahmood's stumps before Wasim
celebrated his 35th birthday with a 41-ball 36 and helped to put on
59 for the eighth wicket with Rashid Latif.

Waqar provided a final flourish with a flat-bat six over mid-wicket
off Gough as he hit 14 not out. England, who dropped four catches
during the match, were left to rue a crucial missed chance on
Sunday morning. Singled out as the key wicket by his captain on the
previous evening, Inzamam was on 36 with the total on 108 for three
when he had edged Caddick to second slip.

A diving Nick Knight appeared to have taken the catch, only for the
ball to dislodge as he hit the ground. Inzamam went on to bat for
six hours 43 minutes and hit 10 fours and a six from 186 balls.
Caddick, Hoggard and Gough all took three wickets, as they had done
in the first innings, with Caddick the pick with three for 85 off
22.5 overs. England won the first Test at Lord's by an innings and
nine runs within three days. English coach Duncan Fletcher was
confidents that his team can win the game.

 He said: "Michael likes a good scrap, he showed he's up for it.
They showed tremendous character under tremendous pressure.
"There's a lot of mental strain after four days. You saw how fired
up Wasim was. It's going to be a pretty difficult total to get but
having scored 85, we must have a chance." "It's a wicket which
encourages positive cricket," Fletcher said. "We'll play it session
by session. But all the bowlers are a threat, they're world class."
-Reuters

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20010603
-------------------------------------------------------------------
Manchester Test delicately poised
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MANCHESTER, June 2: Pakistan rekindled their victory hopes in the
second Test after an England collapse in which their last eight
wickets tumbled for 75 on the third day on Saturday.

The touring team scythed through the England order after centuries
by Graham Thorpe and Michael Vaughan, and then forged 133 runs
ahead with seven second innings wickets remaining before bad light
ended play early. Waqar Younis's side, needing to win to level the
two-match series, turned the game on its head by reducing England
from 282 for two to 357 all out for a 46-run first innings lead.

Then, after starting their second innings by hitting 41 runs off
six overs for the loss of two wickets, they adopted a more cautious
approach to close on 87 for three when they accepted the umpire's
offer to go in at 1726 GMT. There was no hint of a collapse as
Thorpe and Vaughan shared a record partnership by England for any
wicket against Pakistan of 267 - surpassing the 248 second-wicket
stand of Colin Cowdrey and Ted Dexter at The Oval in 1962.

Thorpe equalled his Test best of 138 while Vaughan recorded his
maiden Test century with 120 in a display mixing fine stroke play
with aggressive running after England had been tottering on 15 for
two on Friday. But then Thorpe was run out by a yard following a
fine turn and throw from Wasim Akram off his own bowling to make it
282 for three and one run later Vaughan shaped to avoid a Waqar
Younis bouncer with the new ball and was caught behind down the leg
side off his glove. -Reuters

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