Archive for April, 2008

From The News International

Karachi: The newly-inducted government has inherited an unstable economy and needs time to settle various pending issues since the previous government had no policies at all nor did they have reliable models.Federal Minister for Information and Broadcasting Sherry Rehman stated this on Sunday while speaking as chief guest at the launching ceremony of The Gathering Storm — a warning about Pakistan’s political and economic crisis. The book is authored by Yousuf Nazar, an emerging market expert and one of Pakistan’s leading economic commentators.The federal minister criticised the models of the previous government and stressed that the new setup needed time to settle various issues. “They (the previous government) had no agricultural or social policy, nor did they have any policy on energy conservation or on water,” she said. “We have to live with the shocking reality that we have been given the affairs of a country that has fifth highest inflation rate,” she added. Read more »

By Alan Beattie and Javier Blas

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

From Dawn of April 14, 2008

There seems a dangerous disconnect between the economic challenges confronting Pakistan and its response to it. The leadership’s inability to anticipate their gravity and the inadequacy of its response could prove disastrous for Pakistan. Last week, Finance Minister Ishaq Dar presented the ‘balance sheet’ inherited from the previous government as of March 31, 2008 in the presence of the top bureaucrats who had been closely associated with the past regime. He rightly pointed out that the budget deficit has hit unsustainable and highly inflationary level and cut the real GDP growth estimate for the current fiscal year to 6 per cent from 7.2 per cent and revised the inflation estimate from 6.5 to 10 per cent.  These growth and inflation estimates do not fit in with the overall picture nor are they supported by the government’s own data. But he perhaps did not have sufficient time to examine the growth and inflation data prepared by the finance ministry officials to question their validity. Read more »