Keeping one’s word

The finance minister should leave in place institutional mechanisms to ensure that the govt lives up to commitments.

On the coat of arms of the London Stock Exchange, there is a Latin phrase: dictum meum pactum. My word is my bond. It signifies the fact that trust, more than anything else, is the true currency of global business.

So, it is perhaps a bullish sign for the country’s economic prospects that the government is taking steps to honour its commitments to investors.

Over the past week, Finance Minister Ishaq Dar has announced the government’s intention of resolving the dispute with the UAE-based telecom giant Etisalat over the 2006 privatisation transaction of the PTCL.

And in a separate announcement, the petroleum minister said that it would be increasing the supply of natural gas to Engro Fertilisers. Both developments appear unrelated, but they are connected by the government’s desire to live up to the commitments it has made to investors.

On the PTCL transaction, Etisalat claims that it was to receive land as part of the $2.6 billion deal to buy a management stake in the country’s largest landline provider. For Engro, the issue was a sovereign guarantee to provide natural gas to its fertiliser plants.

Both of these commitments were never denied by the previous administration. But over the past five years, the government did nothing to resolve or fulfil these commitments.

The Nawaz government, on the other hand, appears keen to show international investors that Pakistan is open for business. And nothing signals that intention more than keeping the government’s word to the investors who are already here.

However, honouring government contracts should not have to rely on the whims of those in charge in Islamabad. It should happen regardless of who is in office in the finance ministry.

That, after all, is the level of stability and predictability that investors seek. During his time in office, the finance minister would do well to leave in place institutional mechanisms to ensure that the government is bound to live up to its commitments.

Published in The Express Tribune, July 22^nd,  2013.

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