Mar 18, 2009

Pakistan loses millions from crackdown

Furious Pakistani businessmen say they have lost millions of dollars due to a government-imposed blockade to stop mass protests, which they said Tuesday had hammered a further nail into the moribund economy, AFP reported.

Traders accused the government of impounding thousands of containers and trailers across the country, which were used to seal off highways and the exits of main cities to stop activists from marching towards the capital.

Prime Minister Yousuf Raza Gilani ordered an end to the crackdown on Monday after the government caved into protesters' demands to reinstate the country's top judge who was sacked under emergency rule in 2007.

‘Owners charge 7,000 rupees (87 dollars) a day for a container, thus it caused a loss of 175 million rupees (2.2 million dollars),’ Majyd Aziz, a business leader based in the southern port city Karachi, told AFP.

Losses from commodities, which should have been carried by the trailers and containers, also ran into millions of dollars, he said.

‘They included perishable items, which have gone for good,’ said Aziz.

‘The trailers were carrying huge export consignments, which cannot be shipped on time, thus our exporters have faced cancellation orders from the buyers and suffered huge losses,’ Aziz said.

Experts said the government would lose billions of rupees in taxes on the goods that were not transported.

‘We calculate the government could have earned 15 billion rupees from tax collections on the goods that could not be transported through these unused trailers and containers,’ independent economist A.B. Shahid told AFP.

He said that from Thursday, when the protests started in Karachi, to Monday, when the opposition called them off after exacting a government pledge to reinstate sacked judges, industrial activity in major industrial towns was halved.

‘We estimate that during these five days of turmoil Pakistan's GDP lost at least 50 billion rupees (625 million dollars),’ Shahid said.

The blockade also delayed shipments travelling overland to the port in Karachi, causing losses to exporters, he said.

Such losses in business would increase bad loans and amplify the country's economic woes, Shahid said.

Shariq Vohra of the Karachi Chamber of Commerce and Industry also charged that the blockade stopped supplies of goods across the country.

‘The crackdown on the lawyers' long march disrupted supplies of day-to-day commodities from province to province,’ he said.

‘The shipment of chemicals, tiles, food products and numerous imported goods were almost stopped during the protest.’ Gilani's finance advisor, Shaukat Tarin, said the end of the political crisis should have a positive effect on the economy.

‘Political stability guarantees economic stability. Our economy is heading towards better days now and we all hope we'll achieve our goals of economic prosperity at a faster pace,’ Tarin said.

The reinstatement of supreme court chief justice Iftikhar Chaudhry spurred a rally on the Karachi Stock Exchange, where shares soared 5.4 per cent on Monday.

Analysts predicted that the market would do well for at least another few days as the country exits weeks of political uncertainty.

Buffeted by bombings, insurgency and global financial turmoil, Pakistan was hit last year by 25 per cent inflation and saw 10 billion dollars wiped off its international reserves in the year to October 2008.

The country only managed to stave off a looming balance-of-payments crisis when the International Monetary Fund approved a stand-by loan of 7.6 billion dollars and released an initial 3.1 billion dollars in November.

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