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Books on Pakistan
REPUBLICAN REFERENCE
Area (sq.km)
803,940
Population
162,419,946
Capital
Islamabad
Currency
Pakistani rupee
President
Pervez Musharraf
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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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AVIATION
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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