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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: 076 - (26/06/12)

The disqualification of Prime Minister Gilani weakens the credibility of Pakistani state institutions, but not so much his party, the PPP, which can with some plausibility claim to be targeted unfairly. On the background the energy crisis gets worse and law and orders continues to decline.

Gilani is out
The disqualification of Prime Minister Gilani by the Supreme Court in June came as a surprise as Gilani seemed to have survived his court appearance in earlier this year unscathed. The Supreme Court move takes Pakistan into uncharted constitutional territory, but in political terms it does not necessarily weakens the PPP-led government: many PPP sympathisers were already arguing that the Supreme Court was specifically targeting the PPP in a political vendetta. This feeling was strengthened when the first replacement candidate chosen by the PPP, Makhdoom Shahabuddin, former minister of health, was immediately charged by the Supreme Court in connection with a scandal in the procurement of medicines and had to be dropped. Then another PPP figure, Raja Ashraf, was selected. This is not the end of the crisis however, as presumably the Supreme Court will not place the same demands on Ashraf that it placed on Gilani: to help the investigation on allegations of President Zardari’s corruption. In any case, the crisis does little good to Pakistan and is not likely to encourage foreign investors, who have already been deserting the country.

Solutions? Wait until after the elections
The Pakistani government says that the GDP is growing 3.7% this financial year, a slight improvement on the previous year, but even if the government claims that tax collection is going up 25% this year, the fiscal deficit is rising from 5% last year to about 7% this year, at a time when Pakistan find it difficult to obtain credit. This expansion in the deficit is in part at least due to a populist budget, meant to prepare the ground for parliamentary elections: tax cuts, public sector salary increases, investment in infrastructure and public sector and the creation of 100,000 new government jobs. Military expenditure, already very high, has been increased as well. Still no progress is being made in fighting tax evasion; some international organisation official noted that only 4,000 of the 34,000 commercial users of electricity pay any tax – it would be very easy to track down these evaders if the political will was there. The inflation rate is also growing and has reached 12.3%. The power cuts are getting worse as the summer sets in and people can be observed in some cities bathing in the dirty water of the canals to seek some cool. Violence continues unabated in Karachi, in Baluchistan and in the KP, while the police seem unable to stem the wave of extortion which is affecting the country’s business sector, particularly in Karachi where the bulk of the country’s GDP is produced.

Washington brings India in
The negotiations over the re-opening of the American supply route into Afghanistan and through Pakistan, which seemed close to a successful outcome in May, have since stalled over the American refusal to apologise to Pakistan over the killing of Pakistani troops along the border and also over the increase in the fees that the Pakistanis want to charge. The Pakistanis are also restraining the movement of CIA operatives inside Pakistan. The Americans are trying to signal to the Pakistanis that they have had enough and that time is running out to re-build a relationship with Washington. The Americans are openly inviting the Indians to play a greater role in Afghanistan, as Panetta declared in his recent visit to Delhi, knowing how irritating this is to Pakistani ears, particularly since it is going to happen in the security sector. The message to Islamabad and Rawalpindi is: this way you are going to get exactly what you dreaded, an Afghan-Indian axis. The reactions of the Pakistanis, however, seems oriented towards further escalation of their support for the insurgents in Afghanistan.


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