$10bn US aid to Pakistan termed a myth
By Sabihuddin Ghausi
KARACHI, Feb 11: Special Secretary to Finance Dr Ashfaq Ahmad Khan has termed the generally held belief that the US provided $10 billion assistance to Pakistan after 9/11 a myth which has nothing to do with reality.
Speaking at a seminar on mid-term review of 2007-08 economic performance on Monday, organised by the Management Association of Pakistan (MAP), the special secretary stated that the actual inflow from the US was $9.3 billion till December 2007. Of this, the bulk amount of $5 billion is actually reimbursement of the expenditure incurred by the government on services given to the US, he said and wondered as to how a reimbursement can be called assistance and how it can be misappropriated in Pakistan.
The reimbursement is done only after the defence attaché in the US embassy in Pakistan closely scrutinises the expenditure vouchers of the services which are again checked by the defence authorities in Washington, he said.
In 2003 when President Pervez Musharraf met President George W Bush at the Camp David, the US had agreed to offer an assistance of three billion dollars over a period of five years by providing 600 million dollars a year. Of this, 300 million dollars are for military purposes and 300 million dollars as economic assistance.
The military assistance, he explained, is in the form of hardware and equipment and the government got 297 million dollars each year during the last three years. About the economic assistance, he said the bulk amount was being spent by the USAID in which Pakistan government had no control.
Dr Ashfaqs complaint was that the US media did not carry details of the so-called US assistance despite being given all briefings and facts about it by him.
He also stated that the government paid Rs160 billion interest money and on encashment of Defence Saving Certificates at the rate of 18 per cent on maturity after 10 years, and was paying Rs100 billion this year also.
He recalled that Mr Shahid Javed Burki, the then caretaker finance minister, had raised the interest rate on Defence Saving Certificates from 16 to 18 per cent which led to a massive flow of term deposits in banks.
Responding to a criticism that the government neither visualised nor planned increase in the electricity generation to meet the rising demand on achieving a certain level of economic growth, Dr Ashfaq surprised everyone by disclosing that there was a power surplus of 3,000 to 4,000 MW in the country during 2002 and 2003.
We anticipated electricity consumption growth at three per cent a year and found that the installed capacity was sufficient till year 2010, he informed. Even at six per cent growth in the electricity consumption, there was enough power generation capacity to last till 2007 or 2008.
But because of rapid economic growth at seven per cent in the last five years, the electricity consumption grew at 10 per cent a year and hence the problem, he said.
In 2001, he said the government was exploring to export electricity to India because it had excess capacity and the government was forced to pay at least 60 per cent of capacity to the private power operators no matter the electricity was produced or not.
It was the attack on the Indian parliament in 2001 that brought such negotiations to an abrupt halt, he reminded.
He asked the participants how many of them would have responded to invest in an electricity generation project in Pakistan when there was actually a surplus and an idle capacity.
Referring to the observations that expanding current account deficit was putting a tremendous strain on the exchange value of Pakistani rupee which was being quoted at Rs62.8 against dollar, the special secretary said the rupee maintained a Rs60 parity with dollar for so long that many people thought it is permanent and fixed.
It is now moving within two to 2.5 per cent band, he said.
He was asked the justification of raising $500 million at the rate of six per cent from the international capital market by way of floating bonds when there were $15 billion foreign exchange reserves.
Ask this question to China that raised a billion dollars through bond floatation while having foreign exchange reserves of 1.5 trillion dollars, he quipped.
We got a good rating for bonds in May 2007 when there was turmoil in the country, he said, but blamed media reports for spoiling Pakistans image that worsened countrys international rating.
The special secretary refused to answer a question when asked to comment as to how the recently announced monetary policy of the State Bank of Pakistan would have an impact on growth.
There is a big China wall between the finance ministry and the State Bank, he said.
He refused to be dragged into a discussion when told that there was a fiscal and monetary coordination board. Yes there is, he acknowledged, but did not say more.
Mr Aftab Ahmed Khan, a retired bureaucrat who was finance secretary, also endorsed tight monetary stance on the plea that last year too the monetary expansion was 19 per cent against a target of 13.5 per cent.
While he acknowledged the growth in economy, he said inflation was bringing troubles to consumers.
$10bn US aid to Pakistan termed a myth -DAWN - Business; February 12, 2008
