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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

Update No: 061 - (25/02/11)

A new start?
In February the Gailani cabinet resigned in order to allow a major overhaul of its own structure, from one of the largest governments of the world (54 ministers) to a more modest 22-members cabinet. Many observers have judged this a cosmetic move meant to distract attention from the failure of the government to implement more serious reforms; the Pakistani public does not seem impressed either. The key ministers are still all there, except for Foreign Minister Qureshi. Another populist measure that the government has been discussing with the opposition PML-N is a 25% cut in the salaries of government officials working in grade 17 or above. The salaries had just been increased by 50% in the 2010-11 budget. On most other issues government and opposition remain divided. Nawaz Sharif and the PML-N are opposed to the introduction of the planned general sales tax, insisting instead that the government should cut expenditure and curb corruption.

Washington-Islamabad: the axis of contradictions
In less than three years, the per capita debt burden of Pakistanis has increased by 170%, as the government has been trying to keep the economy afloat, through borrowing and spending. As a result, debt servicing is five times as big as the ever shrinking development budget; total liabilities have reached US$117 billion, about half of them with internal creditors and the rest with international creditors. The depreciation of the Pakistani rupee contributed to compound the problem. The main concern of the government seems now to keep borrowing; the US$ 11.3 billion loan suspended by the IMF in July 2010 because the government had failed to implement the general sales tax and other reforms is the object of a diplomatic effort to convince Washington to intercede with the IMF, and have the loan reinstated. Success in this regard does not seem likely as tension between Pakistan and the US has been high during February, as a result of a dispute concerning a US ‘diplomat’ (at least that’s what the US says he is), accused of the murder of two Pakistanis, claiming self-defence. The Pakistani government cannot challenge the courts, who want to decide the fate of the American themselves; the case is murky by no means a simple one, and the man in the street would be incensed, if this individual could get away with what might be a double murder. In turn, the Americans are deeply irritated by the behaviour of a government that they are keeping afloat with financial support and favours. The government is essentially unable to contain its spending, but has not given in to a key IMF demand of strengthening the role of the Central Bank. Bank officials attribute the rising inflation, now around 15%, to government borrowing. The Bank repeatedly increased the rates in order to discourage borrowing, but the patronage-oriented instincts of the Pakistani political class are too strong to be fought with these measures.

Not easy to manage
Carrying out reforms in Pakistan is not easy, as demonstrated recently by the resignation of Pakistani Airlines’ chief executive, following protests and strikes by the airline’s staff. His plan to share routes with Turkish airlines would have helped in reducing the losses, but the personnel feared job losses and pay cuts. Essentially, the Pakistani political class hopes that somehow the country will stabilise again, reach a new equilibrium with a mixture of external help, luck and adjustment by the population itself. The partial recovery of the rupee in recent weeks (now at a eight month high against the dollar) eases for example the situation, at least a little bit. The rupee has been strengthening on the basis of a recovery of foreign currency reserves and of an increase in remittances from Pakistani workers abroad. Still, the latest GDP growth forecast for the year ending June 2011 is 2.5%, down from the previous 4.5% forecast.

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