Country Report Pakistan June 2009

Summary

The reinstatement of the Supreme Court chief justice, Iftikhar Chaudhry, has reduced political tension, and a degree of stability is likely to return in the short term. However, broader political stability will remain elusive.
The new US policy for Pakistan and Afghanistan encompasses both military strikes on suspected Islamist militants and development assistance, but will also seek co-operation and "accountability" from Pakistan.
Pakistan's acceptance of a US$7.6bn emergency financing package from the IMF means that it will lose a considerable degree of autonomy in setting economic policy.
The government's focus on reining in the fiscal deficit means that it will have to cut expenditure. The Economist Intelligence Unit nevertheless estimates that the deficit will reach 5% of GDP in fiscal year 2008/09 (July-June).
The State Bank of Pakistan (the central bank) expects to see a more marked fall in inflation in the coming months, and as a result will shift its policy bias away from fighting inflation and towards supporting economic growth.
We forecast that real GDP will expand by only 2.3% in 2009/10, representing a weak recovery following estimated growth of 1.3% in 2008/09.

The military claims that it has killed at least 1,000 Islamist militants in the course of its offensive in the North West Frontier Province. However, the lack of independent witnesses makes the claim impossible to verify.
Despite the army's offensive, militants continue to launch terrorist attacks. Major bombings have occurred in, among other places, Lahore and Peshawar in recent weeks.
On June 4th the National Economic Council approved the Public Sector Development Programme for 2009/10, which is worth a record PRs621bn (US$7.7bn).
On May 23rd the Pakistani and Iranian presidents finalised an agreement to construct a gas pipeline between Iran and Pakistan. The pipeline could reduce Pakistan's oil import bill by as much as US$1bn a year.
The minister for investment, Waqar Ahmed Khan, announced in May that Pakistan would increase the amount of farmland available to foreign investors sixfold, from 1m acres to 6m acres.
A group of international donors pledged a total of US$224m in May. The funds are mostly intended to support relief efforts for people displaced by the fighting in Swat.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;60;70;49;20;47;37;65;48;53
NAICS Code: 212;52;72;22;11;311;48;336;53;517;44