Economic Disaster under PML (N)
Address by Leader of Opposition, Mohtarma Benazir Bhutto
to Peshawar High Court Bar Association
December 03,1998

Some segments of the business community, had high hopes when Nawaz Sharif came into power through Presidential intrigue. False expectations were raised when the regime promised tax cuts, package to reduce debts, recovery of defaulted bank loans, and commitment to strengthen CBR to keep the previous government's target of bringing the budget deficit down to less than 4% of the GDP.

The euphoria disappeared fast. The regime neither had the will nor the capability to implement the promised packages. Instead, the regime went quickly for legislation in great secrecy and abuse of Parliamentary procedure. Constitutional amendments to nullify the 8th Amendment and the 14th Amendment to prevent defectors did not even figure on the Order of the Day or go to any Parliamentary committee for discussion. Subsequently, the removal of Chief Justice of Pakistan was ensured through sheer thuggery by mobbing the Supreme Court of Pakistan with a view to tame the judiciary. The President was forced to resign under threat of impeachment. The crude manner in which the regime undemocratically forced the Chief Justice to go on leave split the apex court and gave rise to the term "Briefcases for the Judiciary". Unfortunately for the Nation, the bag man of the regime was made President of Pakistan. A man who had openly committed contempt of court by directly attacking the conduct of honourable judges of the Supreme Court. It is unfortunate that a young lawyer Haji Dildar was recently convicted for contempt for stating a historical fact namely that there is natural justice as evidenced from the fact that dogs ate the body of the Chief Justice of Lahore
High Court Maulvi Mushtaq, who sentenced Quaid-e-Awam Zulfikar Ali I3hutto to death. More unfortunate was the remark of Nawaz Sharif s former Law Secretary who retorted "Dogs like You".

Our judiciary as an institution is weakened when people such as the President who pretend to be pious are allowed to commit gross contempt of court and young lawyers who recall bitter facts are sent to prison.

It is a misfortune that those who storm the Supreme Court are freed and garlanded by the regime, that no action is taken against the dictator Nawaz Sharif for instigating and bussing the mob which attacks in full public view the highest judicial forum in the land. However, this misfortune is not our destiny. The legal community has a special responsibility to spearhead charge and send home a regime which is brutal and immoral. I am sure you will succeed in this task.

Economically, the regime failed abysmally. With the help of SGS and Cotecna, PPP Government had doubled tax revenues from Rs.140 billion to Rs. 300 billion approximately. Despite appointing a highly paid banker imported from London as the head of the CBR and massive new taxation, Revenues still stand at Rs. 300 billion. SGS/Cotecna had detected $ 2 billion missing revenues which the PPP Government was investigating when it was over thrown.

The magnitude of the missing $ 2 billion for Pakistan can be understood if we compare it to the $ 1.2 billion for which we have gone to the IMF. However, rather than raise the nation's revenue and reduce its debt, (as the PPP was doing), the PML(N) was bent upon protecting those unscrupulous elements who over-invoice, under-invoice and cheat the country and its people of a bright future.

The frozen revenue collection despite a massive fall in oil prices has increased the national debt and adversely affected the economy.

Against this background, the regime picked up unnecessary quarrel with the multinationals. A special and novel law was passed threatening to cancel the IPPs projects unless they admitted they had paid a bribe. Admitting to having paid a bribe was to be awarded with the contract. This was a blatant attempt to bribe multinationals into lying under threat of losing billions of dollars they had invested in the projects. Much to the dismay of the PML(N) the multinationals preferred to lose money and protect their reputations than lie and allow them to become pawns in the bitter, partisan political battle.

The revenues denied to Pakistan through cancellation of SGS and Cntecna contracts and the investment lost to Pakistan through scandilization of the IPPs has adversely affected the future of our children and the prestige of our country.

Although we are a nuclear power, thanks to Quaid-e-Awam, we are a bankrupt nation, thanks to Nawaz's PML, pitied or mocked by friends and foes, going with a begging bowl to the children in Manchester and Birmingham asking for $ 10. This is the humiliating state to which Nawaz Sharif has reduced this once proud federation which hosted the Islamic Summit and the Muslim Women's Olympics.

The fall in the Revenues caused by cancellation of the SGS/Cotecna contracts has added to poverty nationwide. Sindh and Balochistan were rendered bankrupt through lower tax collections by the CBR compared to the NFC targets. Organizations like WAPDA and KESC with cash deficit of over Rs. (60) sixty billion, defaulted in payments to PSO, PPL, Sui Southern, Sui Northern, NRL, and OGDC for supply of oil and gas. The removal and arrest of the Pakistan Steel Mill Chairman, Usman Farooqi, enabled fixing of Steel prices to benefit Nawaz Sharif s personal business at the cost of Karachi's proud Steel Mills where 40,000 Karachi-ites work. The anti-Labour policies in PIA where hundreds of young people lost jobs unnecessarily, led to demoralization and bankruptcy of PIA. Shares of Pakistan Telecommunications fell. Every major public sector organization is financially worse off today than it was under the excellent management of PPP government. Despite IlVV, World Bank, Asian Development Bank and other International Financial Institutions (IFIs) funding Qarz Utaro Mulk Sanwaro Scheme, foreign exchange reserves fell. Foreign Exchange reserves under the PPP stood at dollars 2 billion on June 30, 1996. They fell to $ 1 billion in June 1997 and down to $ 600 million in June 1998.

The PPP government had increased forex reserves from $ 300 million when we took over, to $ 2 billion on June 30,1996 due to my travel abroad as Prime Minister. These travels brought in massive foreign investment which acted as the engine of growth for our economy. The economic team, under my leadership, paid of an additional $ 1 billion of Pakistan's most expensive debt. You can say we had the "Midas touch". Whatever we touched turned to gold. However, whatever Nawaz Sharif touches, turns bankrupt. But this is not our destiny. We can and we will change our ways.

For the last 50 years, this nation ate up its most gifted children. This started with the murder of Prime Minister Liaqat Ali Khan, the disqualification of Prime Minister Sohrawardy, the hanging of Prime Minister Zulfikar Ali Bhutto and dismissal of two governments of Mohtarma Benazir Bhutto. But for the next 50 years we will do things differently. We will recognize that democracy gives us strength and the children of democracy, governments born of free, fair elections give us strength.

The lack of leadership shown at the time of nuclear blasts caused further injury to our economy and thereby the hard working peasants, labourers, middle classes and salaried classes of Pakistan. Instead of signing the CTBT on May 28, 1998, the PML Nawaz (N) regime chose to freeze foreign currency accounts. This shattered investors confidence in the country. It deprived the country from its usual inflows of remittances from overseas workers, receipts in foreign currency accounts and foreign investment (both foreign direct investment and portfolio investment) aggregating to nearly $ 5 billion per annum.

The unilateral decision to thrust the Kalabagh Dam despite serious reservations about the viability of the dam, an unrealistic budget that failed to take into consideration the effect of sanctions imposed by G-7 countries, the mess in fixing a proper exchange value of rupee and the introduction of distorted multiple exchange rate system which encouraged the under and over invoicing of exports and imports, introducing the bogey of CA-15 with an intent to dismantle the superior judiciary of the country and allow, unchecked by judicial constraints, power in the Prime Minister to dictatorially determine social, political, economic, cultural and religious activities.

The recent imposition of governor's rule in Sindh has further weakened the federation. In the Senate the regime admitted that over 3600 deaths had occurred in Lahore in the last 9 months as compared to 1500 in Karachi. Yet it is the deaths in Karachi which are played up. Nawaz Sharif’s brother has played havoc with the lives of the people of Punjab. The 3600 deaths took place as opposed to where 1500 deaths took place.

Surely Tarar wno claims to be a "good Muslim" should have imposed Presidential rule in the country when the PML(N) admitted its total failure in administration by shifting the visit of Crown Prince Abdullah to Lahore.

The PML(N) will never be forgiven by the country for freeing hardened terrorists trained in the foreign countries purely out of political opportunism. Brig. Haroon had disclosed the map of Jinnahpur in a press conference in 1992. Yet those who had plotted and conspired against Pakistan were freed unconstitutionally and rewarded financially through state funds for kidnapping Major Kaleemullah, killing DSPs, Rangers and thousands of Karachi-ites. Those who had used grenade launchers and rocket launchers were freed to continue their criminal activities.

Here I would like to make a distinction between the political wing of the MQM and s

ome of its members who indulge in terrorism. PPP has always been ready to make political compromises. However, as far as terrorism is concerned, we adopt hard line on it believing that terrorism is a threat to the peace and tranquility of the citizens. It is the right of the citizens to life, liberty and the pursuit of happiness which we have vowed to protect and promote. Let me add that there are terrorist elements outside the MQM supporters. Terrorists in Malakand in the TNSM, terrorists in Punjab's sectarian parties, terrorists elsewhere too. It should be a fatal error to single out terrorist only affiliated with the MQM. Any action, to be accepted, must be seen by the people as fair and just. Otherwise it will fail.

The killers of Hakeem Saeed were freed by Mr. Nawaz Sharif. Three MQM ministers who were inducted after the deplorable murder of Karachi's most respected citizen. However, after MQM refused to vote for CA-15, Governor's rule was imposed to browbeat them into submission. The killers of Hakeem Saeed can be proceeded against under criminal and antiterrorist laws already on the books. It has no nexus with governor's rule which has been adopted to bring about a dummy assembly through rigging. A dummy Assembly is for pushing through Kalabagh Dam and getting the stamp of approval on the doctored Census, among other reasons.

The picture of elected representatives of Sindh Assembly with guns pointed on them sitting on the road with the Assembly gates locked and barred is shocking. The PML(N) has disgraced the Nation by allowing such a situation to arise. The recent Indian manouvers of an amphibious assault should be an eye-opener. Such manouvers indicate that the alienation of Karachi-ites will be a significant factor in the event of conflict.

(I am not speaking on foreign policy otherwise I could have elaborated on how the Indo-Pak talks have been badly handled by the regime. Surely postponement of the military exercises was one of the first items our side should have raised as a confidence building measure.)

Against this background comes the Special Dollar Bond Scheme offering conversion of seven billion dollars worth foreign currency accounts into dollars bond. Other attractions include exemption from income tax, wealth tax and Zakat, acceptability as collateral for raising rupee loans, tradable on the stock exchange, acceptance by the privatization commission against sale of assets. These area available as bearer bonds as well as registered and encashable anytime before the maturity period in Pak rupees at the official exchange rate on the date of encashment.

These are undoubtedly one of the most lucrative bonds in the world. Yet they have not taken off because a country with less than US$ 450 million forex which has defaulted in debt service payments totalling US$ 1.2 billion, having a shortfall of nearly US$ 5 billion per annum in the balance of payments, can not meet this additional liability of over US $ 400 million per annum as interest payments and US $ 7 billion as principal in the third year on maturity of these bonds.

For Pakistan, this is jumping from the frying pan into the fire. In 1992 Nawaz Sharif announced the Economic Reforms Act which led to the first crash. This tragic scheme paves the way for another crash in 2001-2003. One fails to understand the logic of the regime unless it knows not what it does. If this scheme succeeds in attracting foreign currency accounts deposit holders, it will result in increasing the foreign currency liability of the State from current US $ 32 billion to US $ 39 billion. Depositors who are yet to withdraw their money from the frozen foreign currency accounts will be attracted by these bonds. They will be attracted because the Bonds are exempt from all taxes, provide tax shelter to tax dodgers and can fetch a premium in the secondary market. The economic package of the PPP government sought to prevent tax evasion. Economic packages by Nawaz Sharif promote tax evasion as 'this scheme shows. As the bonds are encashable in rupees at the official exchange rate prevailing at the time of encashment, with the expected devaluation in about two months time that has already been agreed with the IMF, people are purchasing these bonds from rupees in their frozen foreign currency accounts can make windfall profits. The country will make windfall loses. The conversion of the current rupee balance in the frozen foreign currency accounts to these bonds will have serious adverse consequences for the country, including:

Increasing the State's debt by upto US $ 7 billion, Bank liquidity will be adversely affected as funds are transferred in rupees from banks to the government. The banking sector is already tottering under a mountain of bad debts due to Bank default by Nawaz and Co., will be threatened by closure unless a way is found to re-divert funds, estimated at over Rs. 320 billion from government to the banking sector;
 

This is a scheme to covert rupees into dollars. It does not make sense for anyone with dollars to change them at current curb rate of Rs. 60 to a Dollar and buy the bonds at a loss at around Rs. 50 to a Dollar.

This is a Mad Hatter Scheme which only the former Ittefaq Chartered Accountant, our new Minister of Finance, of the forged Qazi passports fame, could have come up with. Its purpose is to benefit those cronies of Nawaz & Co. who were foiled by the former Director General, FIA from taking out their Dollars on the night of the country's biggest Bank Robbery, beating the previous Taj Company/Cooperatives robbery of the first PML(N) regime. This Mad Hatter Scheme has further compromised Pakistan's economic future and well being of its people.

It is impossible for Pakistan to have the necessary Dollars even for the interest on these bonds, when it is unable to meet even its existing debt servicing obligations. Even if Pakistan obtains the US $ 5 billion IMF bail out package, (a large part of which is rescheduling of existing loans) it will remain short of Pakistan's funding requirement in meeting debt service commitments. Therefore the regime will seek other sources of funding, such as the exorbitantly high cost Islamic Development Bank led consortium financing of US $ 1.5 billion amongst others. It is a matter of calculation that the addition of $ 400 million of interest accrued on the new bonds and $ 7 billion payable on their maturity in the third year will deepen the liquidity crisis making Pakistan's bail out impossible.

And all this is happening because a man called Farooque Leghari let power intoxicate and corrupt him. He dissolved the democratic government leading to a flight of capital forcing the Washington imported Shahid Javed Burki to borrow over $ 1 billion of expensive debt followed by more expensive borrowing. The PPP government believed in no debt or inexpensive debt. They borrow more at expensive rates. We keep in mind the interest of the toiling masses. They keep in mind the interest of their financial empires.

The last twenty months have only proved what the people learnt during the first PML(N) regime between 1990-93. That some one bred by a military dictator does not have the political training to govern democratically through consensus and compromise. That someone who made his fortune by acquiring Ittefaq Foundries for free through a Martial Law regulation is a greedy self seeker who will barter away the economic security of the Nation to protect his own narrow financial interests. That some one who has defaulted on billions of rupees to public sector banks is a failure. A failure as an individual and a failure as a Businessman. A failed Businessman lacks the ability to create a fair and just business atmosphere for the business and trading communities to compete and thrive. A man who steals taxes and can not show the source of funding for his known assets and presides over an industrial complex of ill-gotten wealth, is a poor example for the youth of our country to follow. Here is a tortured soul driven by fear. The fear that what he has stolen will be recovered. He fights for financial power and believes he needs political power. Lacking popular support he seeks the last refuge of scoundrels using the sacred name of religion.

A man who has brought disgrace to our country, weakened it, divided it, bankrupted it, demoralized it, destroyed its institutions and given birth to terms such as "Briefcase Judges", "Crore Commanders", "Corrupt Politicians".

A deeply flawed man obsessed with the politics of revenge, the politics of ethnicity, the policies of greed and thuggery.

It is not our destiny to be burdened with the leadership of a man who stole power through a presidential conspiracy. Our destiny is in the hands of the people of Pakistan, renowned lawyers, such as yourself who burn with the zeal to see this great country of ours move forward into the 21st century as part of global community working for the teeming mass of humanity, building global bridges of understanding, ushering in a period of peace, stability, harmony, and prosperity.

The legal community has been in the forefront of the movement for the Rule of Law. At this critical time, a critical responsibility lies on your shoulders to safeguard our future by building up the movement to force Nawaz to quit to pave the way for fresh elections under a neutral interim government of National consensus.

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