Wednesday, 30 April 2014

Viewpoint: Eurobond: Success and significance

Courtesy:- Ishaq Dar

After seven years, Pakistan has staged a successful comeback in the global capital market by selling Eurobonds to the tune of $2 billion — the largest ever bond offering by Pakistan.
But some in the country are not fully appreciative of the significance of this and there are misgivings, too, which I will address in this article.
Those who follow budgetary proposals are aware that since 2007-08, Pakistan would budget a $500 million foreign inflow on account of the bond issue, which, however, would remain elusive, as economic performance would not justify such issuance. An abortive attempt in 2010-11 was particularly notable.
After seven years this effort has finally succeeded. Against a planned size of $500m, the bond has attracted subscription of nearly $7bn, which was 14 times our expected amount. This performance constitutes a vote of confidence in the government’s policies.
Throughout the roadshows we were given an unusual reception by global investors, who were convinced of the economic turnaround taking place in the country. Investors trusted our claim that the process of reform will remain on track.
It is very instructive to look at the profile of investors who have subscribed to the issue.
The largest subscription of nearly 60 per cent came from the US, followed by 19pc from the UK and the remaining from Europe and Asia. The lead taken by the US is indicative of the largest global investors, such as Eaton Vance Management, Wellington Management, Ashmore Group, BlackRock, Goldman Sachs and Lazard, taking part in the bond. Thus, the most sophisticated of investors have expressed interest and purchased it in high quantities.
The success of the bond is also reflected in the pricing we have achieved. As we moved through the roadshows the lead managers’ syndicate, monitoring investors’ interests and preferences, told us that the investors were interested in two issues of five and 10 years. This was also suitable for us as we plan to build a series of issues with varying maturities.
The pricing process begins by signalling what is known as Initial Price Thoughts (IPTs).
Based on our rating (CAA by Moody’s and B- by Standard and Poor Financial Services), the pricing history of issues of other countries with similar ratings and the feedback received by the syndicate from investors after roadshows, we indicated IPTs of high 7pc and high 8pc for 5- and 10-year-bonds, respectively.
But the overwhelming interest shown by investors led to further tightening of this pricing and we finally got the deal closed at 7.25pc and 8.25pc, for the two bonds. This pricing represented a nearly flat spread of 5.5pc over the corresponding 5 and 10 years US Treasury Bonds.
Given our present credit rating, absence of seven years from the market and pricing structure in our domestic borrowings, the pricing we have received on the Eurobond is highly competitive and greatly in our favour.
The rupee component amounting to Rs 196bn equivalent to $2bn directly reduced the domestic debt of the government of Pakistan on the same day. Thus there is no net increase in the public debt.
The average price of 7.75pc we have received compares most favourably with the latest weighted average pricing of 12.38pc we have observed on the Pakistan Investment Bonds (PIBs) auction held on April 24, 2014. This means that the Eurobond is priced at 4.63pc points better than the PIBs. With exchange rate stability this margin means a phenomenal saving of around $90m per annum by shifting our debt from domestic to foreign.
Some critics have alluded to the size of bond at $2bn, suggesting that we should have restricted ourselves to the original size of $500m.
First, against a subscription of $7bn, accepting only $500m (meaning $1 from $14 on the offer) would have hugely disappointed the investors and laid the basis for poor trading in the secondary market, as there would have been no liquidity.
Second, the share of foreign debt in our public debt has declined from 30pc of GDP to only 18pc of GDP during the last five years, implying that the country was exporting capital by making more payments for debt servicing relative to fresh inflows. Because of this, government borrowings were hugely concentrated in domestic sources, which were depriving the flow of credit to the private sector.
Finally, in view of the pressing need to build foreign exchange reserves of the country, it would have been naive to refuse a higher amount on take for the same price. The flow of $2bn has led to significant reserves build-up, retirement of SBP financing, reduced dependence on borrowings from the commercial bank and a much larger space for the flow of credit to the private sector.
Pakistan had issued three bonds during the period 2006-07. The total amount raised was $1,550m ($500m for 10 year, $300m for 30 year and $750m for 10 year). The average price for the three bonds was 7.16pc. The credit rating for the country at the time was B2/B+ and B1/B+, significantly better than the rating inherited by the present government.
However, the PIB rates during 2006-2007 periods were around 10.12pc, implying only a small margin of 2.96pc below the domestic pricing.
This compares less favourably than the 4.63pc margin recorded in the present deal. Accordingly, the pricing of this bond is highly competitive despite lower rating that we are presently saddled with.
This is one of the major achievements in the last 10 months of the government, and we are determined to continue to work for complete economic revival.

Tuesday, 29 April 2014

Sharif’s resolve to end darkness


Courtesy:- S Rahman

If the performance evaluation of Nawaz Sharif government is intended, it should be done on the basis of two key yardsticks that of terrorism control and power crisis management though other issues are no less compelling.

This criterion is being applied in the light of people’s genuine needs and simple aspirations. They (people’s needs and aspirations) are peaceful living and good living conditions free from painful, lengthy power outages and the concomitant economic instability.

To the people’s good luck, Prime Minister Nawaz Sharif has started working perseveringly on these priorities ever since coming into power following the last May general elections.

Taking up the power sector for the time being in this discussion, the good news for the public is that the government is concentrating on implementation and sustainability of the announced projects, specifically the power production projects.

On the one hand, the projects of public relief are being finalized and launched in rapid succession whereas, on the other, the government is giving full attention to reducing the gap between the launch of a project and its productive stages.

That’s a marked improvement in the area of governance in the country. This has been a rarity in the past, when most often, the governments would announce big projects not to be followed by practical steps, even of preliminary nature.

The people have seen the snail’s pace — and even abandonment — of many projects of national import in the past. But the practice of Nawaz-led Pakistan Muslim League government has always been different, both in the Centre and in Punjab. People still remember as to how a gigantic project like Motorway was initiated by Mian Nawaz Sharif’s former government and how much benefits have accrued out of it to the nation during all these areas.

The same spirit of practical, well planned work is now being applied by the Sharif government to the prevailing conditions especially the energy crisis situation that has assumed alarming proportions.

Combined with this spirit, the Sharif government has also evolved work plans keeping in view the mistakes of former governments and in the backdrop of lukewarm foreign collaboration of the previous days. Now, work plans are made pragmatically and after thorough study of all the pros and cons with a forward looking approach so that the launched projects not only get started without unnecessary delay but also become sustainable. The latter aspect i.e. non-sustainability has been an anathema to our progress but it was never taken as a priority during the incumbency of former governments.

The Sharif government has, however, adopted a multi-pronged strategy to do away with all such impediments and snags and put the development works on a fast, sustainable track. The prime minister’s views on Gwadar are well known to the people as he appears fully determined to convert Pakistan into a strong, durable economic corridor through a huge infrastructure and connectivity system emanating from a world-class deep sea port i.e Gwadar.

And people are also aware of the prime minister’s resolve to rid them of darkness. The other day, he has vociferously declared that the people would soon see the end to this darkness. The prime minister’s focus on energy projects both with the indigenous resources and expertise and with the wholehearted cooperation of foreign companies and governments is a case in point. While all the foreign sources are kept in consideration, the biggest cooperation is coming from our time-tested friend China that also acknowledges the sincerity and seriousness of purpose of Prime Minister Mian Nawaz Sharif.

China is coming in a big way and Pakistan’s experience with Chinese collaboration in various ventures has been remarkable. And, while the sincere cooperation of Chinese friends is a manifestation of their own immense goodwill and good wishes for the Pakistani nation, it is simultaneously an expression of confidence in the transparent development works initiated by Nawaz Sharif government.

The number of these projects is rising day by day. Already, work has begun on a good number of energy generating projects of varied nature aimed at ‘energy mix’ that stands for generating power from different sources so that the end product available to the people is comparatively affordable. In this area, the government has, without the slightest delay, started work on energy production through coal, wind power, solar energy, nuclear energy, hydel power and thermal sources. No stone has been left unturned in putting the work on a fast track, the results of which the nation will start reaping within months albeit with a modest start (to be followed by large scale production of electricity in thousands of megawatts). The first phase of Nandipur project will start giving production from the next month. The coal projects are also being pursued vigorously in different areas of the country alongside solar energy generation units.

The other day Prime Minister Nawaz Sharif inaugurated the 404MW Uch Power Project-II in Dera Murad Jamali, Balochistan although problems of lack of adequate infrastructure for sustainable utilization of additional capacity of the complex had been previously reported. The project will be pursued with full speed and infrastructure development will also be taken care of in line with the top priorities of the incumbent government.


It may be recalled that just a few days prior to the inauguration of Uch power plant, Guddu power project, with 486MW Combined cycle Power Plant was also inaugurated by the prime minister. The Guddu power project was inaugurated seven months ahead of its scheduled completion. It is expected to add between 1600 to 2000 megawatts to the national grid, that means substantial decrease in the menace of loadshedding and thus substantial decrease in the sufferings and problems of the people of Pakistan.

Monday, 28 April 2014

March towards a better future

Courtesy:- MALIK MUHAMMAD ASHRAF

Sitting governments all over the world, for real or perceived reasons, lack credibility and their performance invariably remains under strict scrutiny by the media, its political opponents and the elements within society who have an irresistible propensity to look askance at every thing done and said by them. Therefore, the widely accepted barometer for judging their claims with regard to performance and good governance is the endorsement of their authenticity by independent national and international entities.

Wednesday, 23 April 2014

LWMC busy for new face of Murree

Courtesy:- Zulfiqar Ali

Murree is a famous tourist resort of Pakistan. Its natural beauty is well known throughout the world. For Pakistanis going to Murree has become synonymous with escape from the vicissitudes of life.
Both in summers & winters a large number of tourists converge on Murree & Mall Road have become synonymous with fun & frolic. 
Sadly due to the careless attitude of our countrymen towards cleanliness & waste disposal Murree’s Beauty has been badly marred by the presence of garbage heaps,  solid waste filled drains, & unpicked litter at major tourist hot spots & commercial as well as residential areas. Residents of Murree, shopkeepers & visiting tourists have all contributed to this tale of destruction. 
Keeping in view the importance of Murree as a tourist jewel of Pakistan, Government of Punjab has prepared a special Murree Development Plan. Although newly formed Rawalpindi Waste Management Company (RWMC) is officially responsible for the waste disposal in Murree but keeping in view the success of Lahore Waste Management Company (LWMC) in Lahore, it was assigned the task of providing technical & administrative assistance to RWMC in preparing an action plan for the cleanup of Murree. Infact RWMC wanted to emulate the success of LWMC by following in its footsteps. 
Prime Minister of Pakistan, Mian Nawaz Sharif has taken personal interest in launching a Murree Development Program. Chief Minister Punjab, Mian Shahbaz Shahbaz Sharif has also issued necessary instructions to implement this plan in a short time span. In March 2014 MNA Hamza Shahbaz presided over a meeting to implement the Murree Development Plan. Managing Director LWMC, Waseem Ajmal Chaudhry gave a detailed briefing on the improvement of Solid Waste management in Murree. The plan presented by LWMC was accepted and instructions were issued so that it can start the process of cleanup in Murree as a role model for RWMC. The immediate goal was to initiate the waste disposal process by sending a team of workers and supervisors from Lahore. It was all part of a process to impart technical knowledge and expertise to RWMC so that they can take over the cleanup of Muree in future.
LWMC has already started work on the project to implement a three tier program to clean Murree. It has three components, short term, medium term and long term. GM Operations LWMC Khalid Majeed is in Murree supervising a team of 150 sanitary workers, 15 supervisors, 4 zonal officers and 2 managers alongwith the technical support in the form relevant machinery to clean Murree. This LWMC tean has already undertaken cleanup & waste disposal operations at key spots in Murree like, Mall Road, Kashmir Point, Bus stand, Tehsil Road, Munshi Mohalla, Upper Jheeka Gali, etc. They have cleaned the open heaps and carried out de-silting of drains which were filled with garbage. 
Short term plan is aimed at making Murree absolutely waste free from April 8 till May 10, 2014. Then onward as per mid-term plan, special teams will be constituted and deployed to identify areas lacking in standard state of cleanliness. Problems arising again will be urgently addressed and resolved. New machinery such as three compactors and one mechanical sweeper will be procured and added to SWM system to make it more efficient. The method of door to door waste collection using biodegradable bags and container lifting through compactors will be introduced. Current dumping site of Murree situated at Kuldana will be replaced as transfer station whereas waste will be dumped at Rawalpnidi’s dumping site named Locer.
Existing practice of openly dumping or burning hospital waste will be improved by introducing Incineration based burning of medical waste. Second term plan also includes a massive public awareness campaign at major resorts in the Murree engaging local community and students from Murree, Rawalpindi and Lahore. The objective of this awareness drive is to sensitize local residents especially traders, shopkeepers as well as tourists on adopting the habits of waste disposal using waste bins. This campaign also aims at motivating tourists to use car bags for litter while travelling. Local manufacturing companies, traders and important stakeholders will also be invited to play their part for this cleaning cause. 
During Long term plan, a detailed waste characterization study will be done which later on will help in deciding technology such as composting, Biogas or incineration for the ultimate management of Murree’s waste. LWMC will provide full support for devising a comprehensive strategy and system in this regard under the direct supervision of MD Waseem Ajmal Chaudhary has paid various visits to ongoing operations in Murree .
Murree Development Plan by Government of Punjab would prove to be successful attempt to materialize the dream of cleaning Murree which will ultimately revive the natural scenic beauty of the resort attracting tourists from across the country and abroad. 

Friday, 18 April 2014

Economy on the upward curve

Courtesy:- Noman Ashraf

The Annual Public Pulse Report for 2014 issued by Gallup Pakistan, maintains that there has been a massive improvement in the ratings for overall performance of the PML(N) government (59%) as compared to the performance of the previous government during last year in the office. Gallup which enjoys the highest credibility for such surveys, claims that economy has recorded positive 48% comparative net performance, Pak-India relations 22%, foreign policy 33%, terrorism control 31%, corruption control 36% and inflation control a positive 20%. 

Monday, 14 April 2014

People approve PML-N policies

Courtesy:- People approve PML-N policies

PML-N government’s overall performance during the last 10 months is 55 percent better than the Pakistan Peoples Party’s previous government, Gallup survey report said. The Gallup survey was based on the opinion of general public from urban and rural areas of all the four provinces. It said that economy, Indo-Pak relationship, foreign policy, corruption, terrorism and a policy to overcome the price hike were priorities of the government. Prime Minister Nawaz Sharif was declared by the pollster as the most popular political leader of country while other leaders such as Pakistan Tehreek-i-Insaf chairman Imran Khan, PPP Co-Chairman Asif Zardari, Jamiat-e-Ulma e Islam chief Maulana Fazlur Rehman and Awami National Party (ANP) chief Asfandyar Wali Khan were losing their popularity. Gallup survey also claimed that Punjab Chief Minister Shahbaz Sharif’s performance is better than all the other chief ministers of the provinces.

Thursday, 10 April 2014

The collective responsibility


Courtesy:- MALIK MUHAMMAD ASHRAF

The time to deal with terrorists is now, politicking can wait

Despite the skepticism being expressed by the detractors of the government opposed to talks with TTP and the attempts by certain circles to put around stories of rift between the civilian and military leaders in regards to the strategy and the modalities about dealing with the militants, there are strong portents to suggest that all the stakeholders have a unanimity of views in resolving the conflict through dialogue and are supportive of the government’s strategy in this regard. Ever since the parleys with the TTP have recommenced, the prime minister has been regularly interacting with the COAS, ISI chief, heads of the law enforcing agencies and the party leaders to exchange views on the on-going developments and security related issues, with a view to firm up government’s response to TTP demands as well as to evaluate the preparedness of the government agencies to deal with any eventuality. From these developments it can be safely inferred that the military leaders have started accepting the ascendancy of the elected leadership and their prerogative to take a final decision on any issue of national importance; of course, after thorough consideration of the inputs given by the military leaders and the intelligence outfits. In regards to Musharraf’s trial, there are no indications to suggest that the military leaders were trying to pressurise the government to go soft on the former dictator. Rather they seem to go along with the government’s stance to let the law take its course. The indictment of the former dictator by the court and the refusal of the government to decline his request for removing his name from the ECL, amply testify and reinforce this impression. These irrefutable realities have also falsified the speculations to the contrary, bandied around in the media. Taking decisions on vital national issues through consensus and unfurling a culture of collective responsibility is the best example of ‘deliberative democracy’ which unfortunately has been a missing ingredient in the decision making process during the previous regimes. Pakistan is at the crossroads and instead of indulging in the blame game, as to who was responsible for the obtaining situation, it is time to introspect on the follies made in the past, learn from the history and show impregnable unity in warding off the dangers lurking on the horizon of the country. The state institutions must realize their constitutional roles and make sure that they do not transgress into the domain of other state organs and remain subservient to the elected leadership, as exhorted by the Quaid-i-Azam. The country can be winched out of the quicksand it is stuck into through following the course chartered by the founding father. Any deviation from it is a recipe for disaster. The choice is ours. The talks with TTP seem on course and both sides have repeatedly expressed their optimism about their success. The prime minister is on record to have stated that the talks were progressing in a satisfactory way and the nation would soon hear a good news. The Interior Minister Chaudhry Nisar Ali Khan, briefing the media after meeting the government and Taliban negotiating teams on Saturday, revealed that the government has released 13 more non-combatant TTP prisoners and another batch of 30 prisoners might be released during the second phase of talks likely to be held within two to three days. He said that the government expected the TTP to reciprocate this gesture by releasing non-combatant abductees including Professor Ajmal Khan, sons of Yusuf Raza Gilani and Salmaan Taseer, government employees and foreigners. He said these gestures were made to create an ambience of trust and confidence-building which was essential to initiate discussion on the core and substantive issues. He rightly pointed out that the parleys with the TTP would proceed in conformity with the national interests and with the constitutional parameters. The government is traversing the right course and now the TTP needs to show its sincerity by releasing the detainees pointed out by the government. An unchallengeable conclusion drawn is that the use of military muscle prolongs the strife rather than resolving it immediately. Dialogue is the first and preferable option. What needs to be understood by these elements is that dialogue is not the only and the ultimate option available to the government. The National Internal Security Policy drawn up by the government encompasses a comprehensive strategy to remove the causes of terrorism, development of infrastructure, challenging the dogma on the intellectual and religious level, strengthening the security network, creation of a rapid response force to deal with acts of terrorism and also enhancing and strengthening the capabilities of the security forces to establish the writ of the state in case the parleys fail to produce the desired results. The government’s efforts, therefore, need to be supported by the media, intelligentsia, civil society and all the stakeholders in the future of the country. It is a national cause and not the agenda of a particular party. Politicking can wait for better times.

Monday, 7 April 2014

What do Afghan Elections signify

Courtesy:- MALIK MUHAMMAD ASHRAF

Contrary to fears about disruption of Afghan elections by the Taliban, election day passed without any major incidents of violence and people came out in great numbers to cast their votes. Reportedly, out of the 12 million registered voters nearly 7 million used their right of franchise which in terms of turn out works out to be 58.3 per; a substantial improvement over 30% turn out in the previous elections and much better than most of the countries where voting is not obligatory, including Pakistan and India. This unprecedented and overwhelming participation of the Afghan people in the elections signifies many things. It reflects their desire to see peace returning to Afghanistan after four-decades of turbulence and turmoil; it confirms their faith in democracy to winch the country out of the present quagmire; it indicates the waning popularity of the Taliban and endorsement of the fact that the people of Afghanistan have a burning desire to work with the international community, particularly the US to ensure reconstruction and rebuilding of the country in a safe and secure environment. Another significant feature of these elections is that the people rejected the traditional pattern of voting on ethnic lines and the presidential candidates also chose their running mates from other tribes and communities, showing political maturity and foresight.

Tuesday, 1 April 2014

PM makes forceful case for joining NSG

Courtesy:-  MA Malik

At the just concluded third Nuclear Security Summit at The Hague, Prime Minister Nawaz Sharif while assuring the global community about Pakistan being a responsible nuclear state engaged in promoting objectives of non-proliferation, pleaded for making Pakistan a part of all international export control regimes, especially Nuclear Suppliers Group (NSG). Before venturing to unravel why Pakistan is so keen to join the NSG and what benefits it would accrue to her, it would perhaps be pertinent to have cursory glance at the objectives of the NSG and Nuclear Security Summit in preventing nuclear proliferation and promoting nuclear safety.

Restoring the writ of the state

Courtesy:-  MALIK MUHAMMAD ASHRAF

Constitutions embody the will of nations and delineate the contours of the course to be adopted by them to achieve cherished goals. Adherence to the constitution and the laws enacted in consonance with the constitution, provide the foundations on which the edifice of a state is erected and the spirit of harmony and unity nurtured among different segments of the society that acts as a catalyst for peace and progress. Any deviation from the constitution leads to chaos, disunity and emergence of the fissiparous tendencies that undermine the very objectives that a nation sets for itself to achieve, besides threatening its security.