Malik for formulating NES to get rid of economic crisis

ISLAMABAD: Chairman Senate’s Committee on Interior and ex-interior minister Rehman Malik on Sunday proposed through a letter to the prime minister formulate the ‘National Economic Strategy’ (NES) to move forward to get rid of the present economic crises and to set the system to move towards the national prosperity programme on proper result-oriented directions.

In the letter written to Prime Minister Imran Khan, Senate’s Committee chairman Rehman Malik stated that country is passing through unprecedented economic jolt, and this economic crunch, if not handled properly and effectively, may bring irreversible loss to the country. “Let us admit that the present economic crises cannot be fully attributed to the present government, but it is due to some past faulty economic policies of successive governments, and, if now, proper course of action is not adopted to address the situation then history will not be kind to you as the responsibility now rests with you, he stated in his letter written to the prime minister.

Rehman Malik stated that he would not like to elaborate more on it by generating a debate of blame games rather prefer to opt to make some doable suggestions in this connection for your consideration. “I am proposing here a “National Economic Strategy” as a way forward to get rid of the present economic crises and to set the system to move towards the national prosperity programme on proper result-oriented directions,” he stated.

The Senate Committee on Interior chairman proposed that create ‘National Consortium of Pakistani Banks’ to share the burden of foreign debts by 1/ 4th of the total, discuss in parliament, a proposal for China wherein, we may approach China to buy half of our foreign debt with grace period / deferred payment for the period of five years without any interest incurred. China may recover the amount through exports to Pakistan and some other trade arrangements, a part of remaining debt can be cleared by selling prime lands from all the bigger cities to overseas Pakistanis.

Mega commercial plots and high-rise buildings should be built on the model like Sheikh Zahid Road Dubai and establish a bank dedicated and controlled only by Overseas Pakistanis regulated under Pakistani banking laws. “This will generate enough funds for repayments towards foreign debt and contribute towards enhancement of foreign reserves. This Pakistani Overseas Bank may have participation of all the chambers of commerce of Pakistan,” he proposed.

He suggested that the survey of all the mineral resources should be done with total estimate and should be explored immediately through the “National Mineral Exploration Programme”. “The proven underground mineral assets may be converted into bonds and be floated in the international market and whatever proceeding is received may be diverted to retire the foreign debt,” he proposed, adding that table this proposal of support by China in the form of a concrete Proposal seeking the approval of the House to approach the Chinese government during this forth coming visit of yours and convince China for support by accepting this proposal on mutually agreed terms. He proposed the Prime Minister to make additional three Parliamentary Committees to come up with some effective and doable polices on grounds for Fiscal policy, Internal security policy and Foreign Policy.

Senator Rehman Malik said Argentina had once worst economy, which shrank by 28% from 1998 to 2002, and it faced the great economic depression when the recession began in 1999 leading towards national deficit of 2.5 % of the GDP and external debts surpassed 50% of GDP, and on December 26, 2001, he said the country was at the defaulter of total $93 billion of its external debt. Large-scale debt restructuring was needed urgently, since the high-interest bonds had become un-payable. “The Argentinean government met severe challenges by trying to refinance its debt. The Argentinean debt restructuring is a process of debt restructuring by Argentina that began on January 14, 2005, and allowed it to resume payment of 76% of the $82 billion in sovereign bonds that defaulted in 2001 at the depth of the worst economic crisis,” he said.

He stated that a second debt restructuring in 2010 brought the percentage of bonds under some form of repayment to 93%, and they managed to survive. Similarly, he said that throughout the 1980s and 1990s, Turkey relied heavily on foreign investment for economic growth, with trade above 40% of GNP. “The public debt rose from 38% in 2000 to 74% of GDP in 2001. The IMF assisted Turkey with almost USD30b in total,” he said.

The senior PPP leader said, in 2001, the Turkish government made a 3-year economic plan to pay off the debts and to get the economy stronger. Immediately after the crisis, far-reaching institutional reforms and policy initiatives were taken and economy quickly recovered and Bank regulation and supervision were strongly improved. However, confidence returns relatively quickly. “The economy starts to recover and GDP grew by 5.7% in 2002. The reforms and private investments contributed to persistent banking sector stability during recent crisis years, and, in 2013, Turkey was free from the International Monitory Fund-IMF,” he stated.

He stated that that China helped African countries to repay loans. China surpassed the US to become the largest trading partner of Africa. Bilateral trade agreements have been signed between China and 40 countries of the continent. “In 2000, China-Africa trade amounted to $10 billion and by 2014, it had grown to $220 billion. Many of the African countries have debt restructured,” he stated, adding in the letter that South Sudan announced and agreed to sell its crude oil as payment to China for its roads projects.

He said Ethiopia was the first African country to have its debt restructured where China had agreed to restructure a $4 billion loan for the railway. In Kenya, he said the government asked Beijing to consider providing half of the $3.8 billion for the second phase of the Naivasha-Kisumu standard gauge railway as a grant and the other half as a loan. “Angola proposed for a $5 billion loan for oil-related and structural infrastructure for post-war rebuilding, to be repaid through oil sale to Chinese,” he stated adding that this means that China is now offering billions of dollars of concessional assistance worldwide. We may request China to provide us funds on the same terms as indicated above.

Senator Rehman Malik stated that the economy of Pakistan is $314.6 billion with annual growth rate of 5.79% which is lower than India and Bangladesh. He said common man of our country does not know what exactly the inflation rate is; what parameters are used to control the devaluation of Rupee, value of international oil prices or the complicated international politics because all that he knows or wants to know is a better and visible change in his life.

“Prime Minister, I, therefore, feel that we must wriggle out of our financial crisis by adopting above proposals and restructuring of our foreign loans like Argentina as immediate relief. Also the Turkish model duly helped by China might help in resolving our problems forever,” he stated in his letter to Prime Minister. In the meantime, he stated in a letter that he would draw your attention towards bringing in the National Security Action Plan to have the long term peace to ensure security to foreign investers by following the 3 Ps strategy-- Peace, Progress & Prosperity.

He stated in his letter that he would like to conclude my point of view summing up my proposals as under:

1) Restructuring of our foreign debts.

2) Request China to buy half of our foreign debt in Yuan.

3) Constitute a “National Consortium of Pakistani Banks” asking them to share at least 1/4th of the burden of foreign debts.

4) Establish a bank fully dedicated to the Overseas Pakistanis under the name “The Overseas Pakistanis Property Bank” with 90% shares of the overseas Pakistanis and 10% of local, with its management rest with Oversees Pakistanis.

5) The mega projects on prime locations like Islamabad Kashmir Highway may be sold out to the Overseas Pakistanis through the proposed Overseas Pakistanis Property Bank.

Senator Rehman Malik stated in his letter that the suggestions are being proposed after thorough study of number of countries who were trapped by the IMF and on the experience and successfully strategies adopted by those countries enabling them to get rid of foreign debts.

In the end, “I wish you the best of luck in piloting the nation out of present crisis and please take your Parliament’s support along in such difficult times,” he stated in his letter to the prime minister.