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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)

Books on Pakistan


Area (



Pakistani rupee

Pervez Musharraf

Update No: 003 - (28/04/06)

Lonely Pakistan?
The Pakistani government is clearly irritated by the growing cosiness of the relationship between India and Afghanistan and the US, as demonstrated by Afghanistan's President Karzai's trip to that country, which followed President Bush's own trip. Both Karzai's and Bush's trips evidenced how India is emerging as a preferred partner in the region. Pakistan will try its best to prevent the Indo-Afghan partnership from taking off, for example by not allowing Indian goods to reach Afghanistan via the land route, forcing them instead to travel by sea, which is much more expensive detour. At the same time, Pakistan is suffering the blowback of its own policy of supporting insurgencies throughout the region. The worsening situation in Waziristan once again stole the headlines in April. It is clear that southern Waziristan is near to being fully under the control of the Taleban, and northern Waziristan seems to be going the same way. Attacks on members of the security forces continue, while the Taleban seem to be mobilising support well beyond the provincial boundaries. The Pakistani authorities are reluctant to discuss the situation, for fear of compromising the image of the Pakistani miracle that they are trying to propagate, but at the same time they do not seem to know how to handle the situation. The fact that so far the Baluchi insurgents do not seem to have received any direct help from either India or Afghanistan only makes things worse, as it leaves an even greater potential for future trouble-stirring in Pakistan's tribal areas. On the other hand, it is very unlikely that India will want to support the insurgency even in the future, now that the Pakistani-sponsored insurgency in Kashmir is in decline and that many Pakistanis have expressed disenchantment at the Kashmiri cause.

Economic reforms, but how radical?
With the political debate stifled by the weakness of the anti-Musharraf opposition, the main topics of interests in Pakistan's internal affairs concern the economic reform agenda. One of the most daring plans is to raise the tax-to-GDP ratio, which currently stands at 10%, one of the lowest in the world. On the other hand, the plan does not look so daring any more when it is considered that the ambition is to raise it by at just one percentage point over the next five years, to 11%, when in the neighbouring countries it is already reaches 15-19%. At present, tax collection is actually declining and it is only because of rising customs revenue that government income is going up. This upwards trend is only expected to be temporary, as it reflects high oil and gas prices. For this reason, the State Bank is calling for an expansion of the tax net, with an improvement of collection in areas of the economy which are under-taxed, such as agriculture, services and equity markets. 

Economic growth stimulates imports
Despite the trouble in the tribal areas, Pakistan's economy is unmistakably growing. The State Bank is revising its GDP growth forecast upwards, from 6-6.6% to 6.3-6.8%. Imports are growing rapidly and the current account deficit is reaching 4.7%, more than double the targeted 2.2%. Inflation is clearly under control, thanks also to the tight monetary policy of the Bank. President Musharraf is trying to push Pakistan's economic development towards heavier and more profitable industries and hopes that this year Pakistan will export goods worth US$18 billion and that the same figure will rise to US$20 billion next year. He is at the same time trying his best to present Pakistan as full of attractive investment opportunities, including in the energy sector, where exploration is going on at 22 different spots both inshore and offshore. On the other hand, Pakistan's ranking in the Alternate Solutions Institute's Economic Freedom Index is slipping. It ranks now 98, compared to 90 in 2002 (out of 127 countries), a fact which is not likely to sound attractive to investors. The main problems are reported to be weak legal structures, security of property rights, regulations of credit, labour and business, as well as inadequate access to credit and limited freedom to exchange with foreigners.

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Pakistan to purchase American F-16s

Pakistan has approved the purchase of an unspecified number of F-16s fighter jets from the United States, a cabinet minister said recently, the Hindustan Times reported.
"The federal cabinet has agreed the purchase of F-16 aircraft from the United States," Information Minister Sheikh Rashid said.
It also okayed the purchase from China of a batch of FC-10 fighters and some JF-17 thunder jets being jointly built by Pakistan and China, Rashid said.
The amount of jets and the cost of the deals were not disclosed.
Pakistani President Pervez Musharraf delayed the purchase in November last year following the devastating earthquake which killed more than 73,000 people.
Washington approved the sale of the F-16s to key "war on terror" ally Pakistan in March 2005 after blocking it for 15 years to protest the country's nuclear weapons programme.
India says the US sale of sophisticated jets to Pakistan -- with which it has fought three wars since independence in 1947 -- would upset the military balance in the region and cast a shadow over the slow peace dialogue.

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