Pakistan auctions cars in austerity drive

The auction has been billed as part of Khan’s drive to give “the nation’s wealth to its rightful owners”

A woman with her child visits an auction of government-owned used cars on the premises of the Prime Minister House in Islamabad, Pakistan.

ISLAMABAD: Pakistan’s new government on Monday began auctioning off about 100 government-owned vehicles as part of new Prime Minister Imran Khan’s highly publicised cost-cutting drive, which has drawn mixed reviews.

Auction official Mohammad Asif told Reuters the vehicles could bring in about 2 billion rupees ($16 million) to the cash-strapped government’s coffers, although that estimate depends on finding buyers for four bullet-proof Mercedes, estimated in value together at 1 billion rupees.

The auction has been billed as part of Khan’s drive to give “the nation’s wealth to its rightful owners”, though critics say most of the new government’s cost-cutting measures are more symbolism than significant savings.

Former cricket star Khan, 65, took office last month after a populist election campaign in which he railed against what he denounced as the corruption and waste of the two main political parties that have traded power for more than 50 years in between periods of military rule.

Khan has promised to cut costs, including trimming the motorcades of government officials and selling public land.

“It is a change of mindset,” Khan said in a speech on Friday.

“I will be counting every single rupee I have to spend on me.” Khan’s austerity vows, however, have been undercut by his near-daily helicopter commute from his home in the hills above Islamabad.

Critics say the cost-cutting has been mostly cosmetic.

“There is nothing new in the current austerity drive,” said political commentator Raza Rumi.

Auctions of ageing government vehicles, for example, have taken place for years, though not so publicised.

The 36 Mercedes and BMW vehicles was a larger number than at previous auctions — and the sale offered bullet-proof luxury sedans estimated to be worth 250 million rupees (about $2 million) each.

Still, nearly three-quarters of the 101 vehicles on offer were more than 10 years old, some noticeably knocked about. Two were 32-year-old Toyota Corollas.

Even if the auction were to bring in its projected 2 billion rupees, that is a drop in the bucket compared with the government’s 5.9 trillion rupee ($48.19 billion) budget, which projects a 1.7 trillion rupees in deficit spending.

Still, Khan’s information minister, Fawad Chaudhry, said even symbolic steps were important for building national unity.

Public morale may be important in the coming year as Pakistan could face painful conditions for foreign financing — possibly an International Monetary Fund bailout — to address dwindling foreign currency reserves and a ballooning current account deficit.

Chaudhry argued that small cutbacks can add up.

“If you try to see its effect on the GDP, it is small, but in numbers, it is not small,” Chaudhry told Reuters.

Still, public reaction to the austerity drive has been mixed.

When the new foreign minister, Shah Mehmood Qureshi, announced he would not fly first class, only business class, when travelling abroad, many pointed out that this was already the case under the previous government.

Other early ideas — including Khan’s vow to cut more than 500 staff from Prime Minister House and establishing a six-day work week for civil servants — were shelved as unworkable.

In particular, Khan has been mocked by some for taking a helicopter into Islamabad most days, after publicly declaring he would eschew motorcades and declining to live in the official prime minister’s residence.

Information Minister Chaudhry said the helicopter commute used less fuel than a motorcade, at one point arguing that it cost only 50 rupees (40 cents) per kilometre.

That calculation provoked fresh ridicule.

“Why don’t you stop metro bus service and instead let people enjoy the cheap helicopter rides?” quipped a TV host.

In fact, the eight-seat helicopter Khan uses costs about 200,000 rupees ($1,633) per hour factoring in fuel, crew, maintenance and safety inspections, according to Syed Naseem Ahmad, president of the Society of Air Safety Investigation Pakistan.

Optics aside, analysts say Pakistan will have to take more painful steps — such as raising fuel prices — to make a real dent.

“In a nutshell, there is no indication yet, that Khan has a concrete plan to cut Pakistan’s mounting debt and government spending,” said Yousuf Nazar, former head of Global Emerging Markets Investments, Citigroup.

An indication of cost-cutting policy is likely to come on Tuesday, when Finance Minister Asad Umar announces revisions to the budget.

In the meantime, some of the about 500 attendees at Monday’s auction said they would be happy to take the vehicles off the government’s hands.

Nawab Gul bought a 2005 Toyota Altas for 1.25 million rupees ($10,000).

“They are saying the national coffers are empty. So, here, have my two cents” Gul said.

Another bidder Taufeeq Nawab said he would like to buy one of the older, cheaper vehicles for his family.

“I can say that I have a Prime Minister House car. My kids will feel good riding in it.”


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