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Key Economic Data 
  2004 2003 2002 Ranking(2004)
Millions of US $ 96,100 82,300 73,300 44
GNI per capita
 US $ 600 520 480 160
Ranking is given out of 208 nations - (data from the World Bank)

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Pervez Musharraf

Update No: 004 - (30/05/06)

A friendship shaken
The relationship between Musharraf and the Bush Administration has been worsening markedly over the last few months. The Americans came out with explicit criticism of Musharraf in April, demanding free and fair elections in 2007, civilian rule and civilian control over the armed forces, therefore implicitly criticising Musharraf's double role as president and chief of the armed forces. The Americans also refused to recognise the Baluchistan Liberation Army as a terrorist organisation, sending a signal that they might not support a ruthless anti-insurgency campaign in Baluchistan. While the Pakistani government reacted angrily to US criticism and demands, at the same time it placed an order for 77 F-16 fighters, worth US$3.5 billion. It is likely that the purpose of the Pakistanis is to test how resolute the Americans are in their effort to step up pressure on Musharraf and push him towards what they think is the right path. The Americans would like to see Musharraf become a more conventional president, but it is still not clear how far they are ready to go if he resists and remains in full control of government. He might in fact be tempted by the possibility of using his resistance to US pressure to strengthen popular support for himself, as the US is strongly disliked by public opinion within the country. 

Politicians unite
Adding to Musharraf's worries, opposition leaders Benazir Bhutto and Nawaz Sharif announced in May an alliance to fight together the future elections and oust Musharaf from power. It is the first time that the leaders of the Pakistan' People Party and of the Muslim League have gone as far as forming an electoral alliance. If the alliance will be accepted by the electorate and if the elections will be reasonably free and fair, they might have a serious chance of unseating Musharraf. Observers are divided with regard to how unpopular military rule has become, although it clearly seems to have run past its peak, but without a mass movement behind them, the politicians might not be able to gather enough momentum to force Musharraf to make concessions. Since the old politicians appear to remain relatively unpopular in Pakistan, their success is not a foregone conclusion, particularly as long as the economy seems to be doing well. 

Not all shines in Pakistani economy
Musharraf understandably continues to try building up an image of effective economic management, periodically announcing new initiatives meant to prolong the positive economic trend. The latest two were in May the plan to create a network of vocational and professional schools and the creation of so-called Reconstruction Opportunities Zones in the North-West Frontier Province. Such zones would allow duty-free production of industrial goods and therefore stimulate economic development in this tribal region, currently affected by a growing insurgency movement. 
Although in recent years Pakistan has received pretty positive reporting about the status of its economy, some critical voices do exist. At the end of April a respected former vice-president of the World Bank, Shahid Javed Burki, warned that Pakistan risks a financial crisis of the type which hit Mexico in 1994. His main concern was the possible convergence of a large current account deficit, speculative business activity and a weak banking system. Other economists agree that a further increase in oil prices could make the trade deficit unmanageable. The latest figures show that the trade deficit is widening indeed and was up 93.7% in July-April 2005/06 over the same period of 2004/05. Although exports continue to grow quickly and were up almost 18%, imports grew much quicker, by over 40%.

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