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FDI is up and load-shedding is down during Prime Minister Nawaz Sharif's government's first 100 days. However, there has been little progress on resolving fundamental issues such as lack of security, growing budget deficits, high current account deficits and continuing heavy subsidies to the power sector and various public sector enterprises like Pakistan Steel Mills, PIA, Railways, etc.
Foreign Inflows Jump:
Prime Minister Nawaz Sharif's first 100 days in office have seen a significant increase in foreign capital inflows.
Pakistan has $105.4 million foreign direct investment (FDI) in the first two month of the current fiscal year 2013/14 compared to $52.4 million received during the same month of the previous year, according to a Reuters' report. This is a continuation of the trend from the PPP government's last year in office which saw 76% year-over-year jump to reach nearly $1.5 billion foreign investment in fiscal year 2012-13.
Here's an ET Op Ed by Shahid Burki:
The tax-to-GDP ratio has fallen to a record low; at less than nine per cent of GDP. It is one of the lowest among emerging nations. With such a low rate the government is unable to invest in creating the needed infrastructure and improving the state of human development. Most worrying is the sharp decline in both public and private investment. At about 11 per cent of GDP and with the incremental capital ratio of about four — the proportion of GDP that needs to be invested to produce a one percentage point increase in national output — Pakistan can’t have a GDP increase by more than 2.5 to three per cent. Also troubling is the continuous decline in the country’s share in international trade. In other words Pakistan faces a grim economic future unless the many structural problems the country faces are addressed with some seriousness by the makers of public policy. It is from this perspective that the performance of the Sharif government needs to be viewed.
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The manifesto issued by the PML-N for the electoral contest of May 2013, promised to set the economy on a growth trajectory that would match that of the more rapidly growing Asian economies. It set its sight on a rate of growth of six to seven per cent, to be reached by the year 2018, when its term in office will be over. To achieve that target the party promised to deal with both the short-term problems faced by the economy and also to address the long-enduring structural problems. Both were well known to the students of the Pakistani economy, including some of the people who were assigned senior positions in the new Sharif Administration. Energy shortages, of both electricity and natural gas, were taking a heavy toll on the economy. Continual activity by the forces of extremism had foreign capital leave the country. Persistent low rates of domestic savings had increased the country’s dependence on external capital. The government turned to the International Monetary Fund and quickly concluded an agreement that would provide $6.5 billion of capital along with another $5.5 billion to be received from other donors. The total amount of $12 billion would be disbursed over a three-year period, provided Islamabad adopted a whole host of issues that would help not only to pull the country out of the recession it was in but will also make it possible for the country to climb on a higher growth trajectory. For the long-term, the government requisitioned a development programme to cover all sectors of the economy and also, the relationship between the public and the private sector. This would be prepared by the Planning Commission in the form of what it called ‘Vision 2030’.
http://tribune.com.pk/story/607809/pakistan-on-the-path-to-slow-eco...
Here's a NY Times on soaring stock market in Karachi, Pakistan:
If the best time to buy, as the old business adage says, is when there is blood on the streets, then Pakistan’s commercial capital, Karachi, offers the ideal investment opportunity.
For more than a decade, the sprawling seaport megalopolis of about 20 million people has been racked by political, militant and criminal violence that has taken thousands of lives. Yet, over the same period, the city stock market, which is also Pakistan’s main exchange, has posted spectacular results.
Over the past 12 months alone, the Karachi Stock Exchange has surged more than 44 percent, placing it among the world’s top-performing stock markets in dollar terms this year, according to Bloomberg.
That follows a decade of growth in which one dollar invested in an index fund of Pakistani stocks 10 years ago would have earned, on average, 26 percent every year, analysts say, in a period otherwise notable mostly for bad news. As the stock market rose, the Pakistani military leader Gen. Pervez Musharraf fell, Osama bin Laden was captured and Taliban violence spread from the northwest to cities across the country, including Karachi.
Just as surprising, perhaps, Wall Street firms are driving the latest phase of the stock boom. Bad news can make for a good bargain, they say.
“What you see in the popular press is just one part of the picture,” said Mark Mobius, a fund manager at Franklin Templeton Investments, which has more than $1 billion invested in Pakistan stocks, mostly in the energy sector. “There’s another side to these countries, where life goes on. And that’s what we focus on.”
The gloomy image of Pakistan obscures positive aspects of its economy that, investors say, make some companies an attractive bet. Beyond the headline news, much of the country is getting on with normal life. And with a population estimated at nearly 200 million people — a high proportion of them young — Pakistan offers a large, lucrative market for consumer goods, construction and financial services firms, which constitute the bulk of the Karachi stock market.
The biggest publicly listed companies — like the multinational Nestlé, the Oil and Gas Development Company and Fauji Fertilizer, a military-run conglomerate — pay handsome dividends, which makes them attractive to foreign investors.
And the recent election victory of Prime Minister Nawaz Sharif, a business tycoon, has injected confidence into the financial community, which had been wary of the previous government.
For a time, Pakistani stocks were undervalued by as much as 50 percent to account for risk, compared with a regional discount of about 20 percent, said Taha Javed, a financial analyst in Karachi. Now, as foreign investors pile in, he said, “we are catching up.”...
http://www.nytimes.com/2013/10/04/world/asia/amid-bloodshed-in-paki...
The U.S. has quietly decided to release more than $1.6 billion in military and economic aid to Pakistan that was suspended when relations between the two countries disintegrated over the covert raid that killed Osama bin Laden and deadly U.S. airstrikes against Pakistani soldiers.
Officials and congressional aides said ties have improved enough to allow the money to flow again.
American and NATO supply routes to Afghanistan are open. Controversial U.S. drone strikes are down. The U.S. and Pakistan recently announced the restart of their "strategic dialogue" after a long pause. Pakistan's new prime minister, Nawaz Sharif, is traveling to Washington for talks this coming week with President Barack Obama.
But in a summer dominated by foreign policy debates over the coup in Egypt and chemical weapons attacks in Syria, the U.S. hasn't promoted its revamped aid relationship with Pakistan. Neither has Pakistan.
The silence reflects the lingering mutual suspicions between the two.
The Pakistanis do not like being seen as dependent on their heavy-handed partners. The Americans are uncomfortable highlighting the billions provided to a government that is plagued by corruption and perceived as often duplicitous in fighting terrorism
http://abcnews.go.com/Politics/wireStory/us-quietly-releasing-16b-p...
Here's a WSJ story on Pakistan's return to bond market:
Pakistan is returning to the international bond markets for the first time in six years, joining a host of other emerging market governments and companies who are selling debt while borrowing costs remain low.
Pakistan's offering, expected to be up to $1 billion, comes as money flows back to Asia in search of higher yields amid new expectations that the U.S. Federal Reserve will now keep in place for the time being the aggressive stimulus measures that has pumped the world full of cash.
Other countries such as Brazil, Kenya and Honduras are also raising cash to fund infrastructure projects and alleviate heavy debt burdens.
Interest in emerging markets, including their sovereign debt, has been renewed in the past couple of months as the Fed has held off starting to wind down its bond-buying program, said Mr. Rajeev DeMello, head of Asia fixed income in Singapore at Schroders Investment Management, which manages $388 billion globally.
Mr. DeMello said Schroders holds Pakistani bonds and expects the new debt to attract investors, given that it will offer a high yield and that the country's bonds are not highly correlated to those of other markets in the region.
During the summer selloff in global emerging markets, prompted by expectations that the Fed would soon begin withdrawing its stimulus program, Pakistani bonds held up relatively well because most holders are large institutional investors with longer-term outlooks, Mr. DeMello said.
With global interest rates still low and emerging market investors venturing back into Asia, the country is planning to issue debt due in five to 10 years.
Bond yields throughout Asia have fallen over the last few weeks as investors have jumped back in. The yields on government bonds in Indonesia, Malaysia and Thailand have all fallen since early September.
Pakistan's five-year yield is at 12.3%.
"We have started the process [of the bond sale] and are waiting for the appointment of a lead adviser who will take the process forward," said Shafqat Jalil, a finance ministry spokesman.
Still, Pakistan isn't without its problems. Though its economy is humming, its finances are weak, with revenues from taxes floundering and foreign-exchange reserves falling 34% since October last year. Pakistan is already heavily in debt, with its financing needs one of the highest in emerging markets, according to the International Monetary Fund. Rating firm Moody's MCO +1.08% downgraded the country's government bonds to junk in July last year.
The Pakistani government is raising cash to plug its dwindling foreign-exchange reserves, which are symptomatic of the country's economic woes and trade imbalance.
The government's financial history hasn't been without blemishes, either. It last defaulted on debt in 1999 as it struggled with a balance-of-payments crisis aggravated by international sanctions and a military coup.
Pakistan last issued debt in 2007, with $750 million of 10-year bonds intended for general government spending and budget management. At the time, investors snapped up the bond with bids worth seven times the amount of debt on offer.
http://online.wsj.com/news/articles/SB10001424052702304391204579177...
Here's Washington Post on Pakistan's new anti-terrorism law:
After a decade of terrorist attacks, Pakistan is implementing a new legal framework to deal with its growing militant threat — what some are calling a local version of the USA Patriot Act.
The government says the measure will improve an anti-terrorism effort plagued by inefficiency and abuses. At times, security forces have swept up thousands of suspected Islamist militants without charge, outraging human rights activists. When terrorism suspects do go before a judge, however, they are often freed, dismaying Western officials.
“This law is war, declared war, against those who challenge the state,” said Khawaja Zaheer, the senior justice adviser to Prime Minister Nawaz Sharif. “This law is intended to do what should have been done in 2001 or 2002,” in the aftermath of the attacks on the World Trade Center and the Pentagon.
But in a debate that mirrors the controversy over the USA Patriot Act, activists argue that the new measure will lead to widespread abuses.
“People are already being detained, people are already being kept in internment camps, people are already involuntarily disappeared,” said I.A. Rehman, secretary general of Pakistan’s Human Rights Commission, an independent Lahore-based body. “The only thing they want to do with this is give even more special powers to security forces to detain.”
For years, Pakistan’s leaders have lurched between tough talk on terrorism and sympathetic outreach to some militant groups. This week Sharif condemned a U.S. drone strike that killed the leader of the Pakistani Taliban, Hakimullah Mehsud, days before planned talks between the group and the Pakistani government.
Still, with Sharif facing pressure from Western governments to act, he has been quietly building a legal framework that could underpin a potential military offensive against the Taliban should talks fail.
The new ordinance — handed down in mid-October and effective immediately pending a review by Parliament — may first be put to the test in the economic hub of Karachi, where an offensive against criminal gangs and militant groups has netted about 5,000 arrests in the past three months.
The ordinance formally defines an enemy combatant, clarifies the powers of the army to intervene in internal security, establishes new federal courts, offers additional protections to judges, and codifies the use of extended detention.
The measure draws on previous laws, but government officials say it is broader, legalizing detention tactics and other practices that military and intelligence officials have been suspected of using for years. By doing so, Sharif’s government hopes to avoid clashes with a increasingly independent court system.
“The organized mafia is roaming free due to [a] legal vacuum,” Sharif wrote in a letter asking lawmakers to support the plan....
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One 30-year-old man, who asked that he be identified only by his last name of Khan, a common Pakistani surname, said in an interview that he was picked up by officers in plainclothes while riding his motorbike in northwest Pakistan in June. He said he was blindfolded and detained for 25 days without being told why.
“They did not torture me, just kept me alone,” he said.
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The measure also states that enemy aliens “may be detained by the government for such period as may be determined by it from time to time.”
The 1.5 million to 3 million Afghan refugees in Pakistan could be especially vulnerable to that provision, activists say, noting that many do not have proper documentation and that the ordinance considers “crossing national boundaries” as “waging war against Pakistan.”
http://www.washingtonpost.com/world/pakistan-creates-its-own-patrio...
Here's a Daily Times story on Pakistan economy as seen by the government:
Dar expressed satisfaction over the positive development that Large-Scale Manufacturing (LSM) had increased by 12.8 percent during the month of September. This sector has experienced a growth of 8.4 percent during the first quarter of the financial year 2013-14, mainly because of the proactive approach of the government in liquidating the circular debt resulting in increased generation. Consequently growth in the large-scale industrial sector experienced an increase of 6.0 percent in June 2013 which gradually increased to 12.8 percent in September because of the addition of 1,700 megawatts (MW) in the national grid.
The meeting was informed that foreign remittances have reached $5.2 billion in the first quarter of FY 2013-14, 6.3 percent more than the corresponding period last year and the foreign direct investment has increased by 85 percent in the first quarter of this financial year. “This speaks volumes about the seriousness of the PML-N government in the economic uplift of the country,” the finance minister said.
Dar, expressing concern over the inflation and price hike in the country said, “It was mainly due to the increase in international fuel prices and expressed hope that there will be lesser adjustments in the future. The government is sensitive to the hardships of the people of this country and was on average providing a subsidy of around Rs 2.2 billion every month just to lessen the burden of the rise in fuel prices on the common man.
The ECC also decided to appoint Asian Development Bank as the transaction adviser (TA) in the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline Project. Dar said that ‘involving a credible financial institution as the TA will ensure greater transparency in the deal’.
The ECC also discussed in detail the rise in the prices of onions and tomatoes in the domestic markets. The ECC was told the shortage of both the vegetables is the main cause of the rise in prices which will soon be overcome when fresh stocks of onions and tomatoes reach the markets. Officials representing the Ministry of Food Security told the ECC that during the past three days a survey was conducted in the local markets and it was observed that the prices are already going down and by the end of this month they will improve further. However, Dar, advised the officials of the Ministry of Food Security to bring a better and much more practical proposal to check the rising prices on long-term basis. The ECC also directed the Ministry of Food Security to keep a watch over the prices and deferred the matter till the next meeting.
As regard Energy Efficiency Audit of the captive power plants, the ECC decided to form a committee under the chairmanship of Ministry of Water and Power secretary and comprising representatives of ministries of industries and production and petroleum and natural resources, commerce, National Electric Power Regulatory Authority (NEPRA) and Oil and Gas Regulatory Authority (OGRA). The committee will propose a viable plan for the capacity building for energy efficiency audits and to introduce transparency in the system. The finance minister said, “We shall start the process of conducting energy efficiency assessment from the public sector and will initiate awareness campaigns for the private sectors to use methods that could save energy and help in bringing the country out of its present energy crisis.”
http://www.dailytimes.com.pk/default.asp?page=2013%5C11%5C14%5Cstor...
Here's a Wall Street Journal report on Pakistan's KSE-100 performance in 2013:
..The benchmark index traded in the financial capital Karachi jumped 49.4% last year, ranking as one of the world's top performers. The market jumped another 2.8% Thursday, the first trading day of 2014.
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Flows from foreign investors into Pakistan reached $283 million from the beginning of May, the month of the election, to the end of 2013, according to the National Clearing Company of Pakistan. Global investors have also snapped up Pakistani government bonds with yields, which move inversely to prices, falling to 7.54% recently from as high as 11.69% in April on the 10-year bond.
In a further sign of growing confidence, the government said last month it is also aiming to sell billions of rupee debt aimed at the Pakistani diaspora. A spokesman for the finance ministry said there is currently no specific time frame on the issuance of the bonds.
The optimism stems from the government paying off $5 billion in debt that was weighing on the energy sector, freeing up funds at fuel importers and power producers and distributors. The country also agreed to a long-term bailout loan of at least $6.6 billion from the International Monetary Fund to avoid a potential balance of payments crisis. The government has in addition announced a far reaching privatization program which will include the national airline and electricity producers.
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"Pakistan as a market has very many companies that are trading below their fair value, but as it goes you get distracted by other more important markets," said Arnout van Rijn, chief investment officer at Robeco Asia Pacific in Hong Kong, who manages the $1.2 billion Robeco Asia-Pacific Equities fund.
The market has been volatile too, the currency and stocks plummeted in 1998 following a test of nuclear weapons that attracted international sanctions when Mr. Sharif was last in power.
The market has been up since the end of 2008 however, with shares soaring 329% to the end of 2013—despite the country being hit by a bloody Islamic insurgency, the economy nose-diving and Karachi being torn apart by gang violence during that period.
Some investors say that those companies that survive both a weak economy and regular violence throughout the country are well run, resilient and especially appealing. Unilever Pakistan Foods Ltd., a unit of the consumer goods giant, shot up 116% last year.
"When you have to deal in this kind of environment, I think you have to be extremely good as management to deal with it and survive," said Thomas Vester, fund manager at Lloyd George Management, who runs the firm's frontier market investments, and manages assets worth $656 million as of Oct. 31.
And the relative political stability now is encouraging more investors to focus on the country whose population of around 180 million makes it the sixth most populous country in the world and a potential draw for those betting on rising incomes and more consumer spending. The market remains cheap even after the strong run-up earlier this year—currently trading at over nine times trailing 12 month earnings—a common valuation measure used by stock analysts.
"Pakistan has a fairly diverse economy with a large and young population that needs to be fed and supplied basic infrastructure such as electricity," said Caglar Somek, global portfolio manager at Caravel Management in New York, which manages around $650 million.
"If you find the companies that supply those basic needs, growing at double digit with high profitability, you can buy them at valuations that are on average 30% to 40% cheaper than their emerging market peers," said Mr. Somek.
http://online.wsj.com/news/articles/SB10001424052702303640604579297...
Here's a Wall St Journal story on Pakistan's heavy losses in terror attacks:
Each day, Cpl. Hamid Raza helps strap Cpl. Mohammed Yakub to a physiotherapy bench, lifts it and wipes the sweat off his bewildered comrade's forehead. Eyes darting, Cpl. Yakub often screams and grunts through the procedure, flailing his hands.
"Traumatic head injury," Cpl. Raza says softly. "He realizes it's me, and he tries to speak, but he can't. He can't eat, he can't talk, he can't remember the words."
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The Pakistani army has lost roughly twice as many soldiers in the conflict with Taliban fighters as the U.S. It is a toll that keeps rising as American forces prepare to withdraw from next-door Afghanistan by December amid an intensifying war on both sides of the border.
In Washington and Kabul, officials often accuse Pakistan of being a duplicitous and insincere ally, charges fueled by alleged covert aid to the Afghan Taliban from some elements of the Pakistani security establishment. In 2011, the then-chairman of the U.S. Joint Chiefs of Staff, Adm. Mike Mullen, described the Haqqani network, a group of insurgents operating from bases in North Waziristan who are affiliated with the Afghan Taliban, as a "veritable arm" of Pakistan's Inter-Services Intelligence agency. Pakistan's government denied the accusation.
Murky as this war is, one fact is clear: The price ordinary Pakistani soldiers pay in the struggle against Taliban fighters is real and high. Since Pakistan's army began moving into the tribal areas along the Afghan border to confront the Pakistani Taliban in 2004, more than 4,000 Pakistani soldiers have been killed and more than 13,000 injured, according to military statistics.
By comparison, the U.S. has lost 2,315 service members, just over 1,800 of them killed in combat, in Afghanistan since the 2001 invasion.
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Just last month, the Taliban executed 23 Pakistani troops they had captured, prompting the government of Prime Minister Nawaz Sharif to suspend tentative peace talks with the militants. That bloodshed followed several deadly attacks in January, including a bombing of a convoy heading to North Waziristan that killed 26 and a blast that killed eight soldiers here in Rawalpindi, just a few hundred yards from the army's headquarters.
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A soldier with Pakistan's Northern Light Infantry, Pvt. Ali, 28, lost his right leg during a clearing operation in the Kurram tribal area in 2012. He has had three surgeries since then.
"The Taliban would fire rocket-propelled grenades and attack at night, never showing themselves," he says. Following one of the patrols, which involved a gunfight, Pvt. Ali was returning to his base. He stepped on a freshly planted Taliban mine.
"I didn't lose consciousness after the blast, and the other soldiers carried me down on a stretcher," he recalls.
A fellow amputee, Pvt. Ali Rehman, 21, had just arrived in the Kurram area when his unit was sent to retrieve the body of a soldier killed by the Taliban higher up in the mountains. "We were going through the valley in an open-backed vehicle, and that's when we struck an IED," he recalls. The explosion sheared off his right leg.
Amputees are usually able to serve in a desk job in the military once fitted with prosthetic limbs. The military hospital in Rawalpindi provides some of the most sophisticated such devices, says Maj. Zaheer Gill, its specialist of rehabilitative medicine....
http://online.wsj.com/news/articles/SB10001424052702304691904579348...
Here's an AFP report on Pakistan economic recovery:
Pakistan's finance minister Ishaq Dar on Wednesday said he was optimistic about an economic recovery after the rupee breached the psychologically important 100 to the dollar mark.
The currency had been losing its value against the greenback since Sharif's PML-N government came to power in June last year, sliding from 97 rupees to the dollar to a low of 108 in December.
Since then it has mounted a recovery and as of Wednesday evening the rupee was trading at 97.90 to the dollar.
Addressing a press conference Wednesday, Dar said: "The price of onions, tomatoes and dollars has been brought down to the level when Prime Minister Nawaz Sharif took oath."
"It is a positive development for the economy and will boost investors' confidence into Pakistan," Dar said, adding the government was not resorting to injecting reserves from the state bank in order to stabilise the currency.
"We did not use State Bank money to strengthen the rupee, but persuaded exporters to bring back their money to Pakistan and checked currency speculation, which resulted in the rising value of the rupee," he added.
Dar said that revenue from tax collection, which has traditionally been problematic, had increased by 17.7 percent and the budget deficit was down to 3.1 percent as compared to 4.1 percent in the first eight months of last year.
He added that overseas remittences by Pakistanis abroad stood at $9.23 billion, representing an 11 percent growth compared with last year.
Dar said that exports have also shown a 6.2 percent growth while the rate of inflation was currently 8.6 percent.
"We are on track to achieve six percent GDP growth rate in three years and Pakistan can emerge as a strong economy in the region," Dar said.
The IMF approved a $6.7 billion bailout loan package for Pakistan in September last year to help the struggling nuclear-armed country achieve economic reforms, particularly in its troubled energy sector.
The IMF said Pakistan's economy was picking up, with growth expected to reach about 3.1 percent in 2013/14 compared to its earlier estimate of 2.8 percent.
Cash-strapped Pakistan, plagued by a bloody homegrown Taliban insurgency, is battling to get its shaky economy back on track and solve a chronic energy crisis that cripples its industry.
The IMF made an initial payment of $540 million, and in November fund officials said during a monitoring visit that Pakistan was "broadly on track" with reforms.
In December, Pakistan received $554 million as a second tranche of the loan.
http://www.google.com/hostednews/afp/article/ALeqM5jBS24dVjJSauNIc7...
Here's a Financial Times report on Saudi aid for Pakistan:
Saudi Arabia has given $1.5bn to Pakistan to bolster the country’s falling foreign currency reserves and help cement security ties between the two countries.
Senior officials at the finance ministry in Islamabad and the central bank in Karachi said that at least half of the funds, which were deposited in March, came as a grant
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“The Saudi leadership has given these funds to Pakistan to help the rupee,” said one central bank official. “The other half [of the funds] could also eventually become a grant.”
The injection of Saudi money will lift Pakistan’s liquid foreign reserves about 18 per cent and offer a boost to a struggling economy.
The Saudi support to Pakistan follows a mid-February visit by Salman bin Abdul Aziz al-Saud, Saudi crown prince, amid suggestions that Saudi Arabia is seeking an expansion of its security ties with Pakistan.
In February a senior Pakistani intelligence official told the Financial Times that Saudi Arabia was seeking “a large number of [Pakistan] troops to support its campaign along the Yemeni border and for internal security”.
The official confirmed that Pakistan’s agreement, during Prince Salman’s visit, to support the establishment of a “transitional governing body” in Syria was an important aspect of the deal. Islamabad had previously remained neutral and urged Syrian president Bashar al-Assad and his opponents to end the conflict peacefully.
The Pakistani rupee has appreciated more than 4 per cent in the past three weeks with officials pointing to the Saudi assistance as one of the reasons for its strengthening. But some believe there are inherent risks for Pakistan, which is fighting an internal battle with Taliban militants, in getting closer to Riyadh.
Historically, Pakistan has sought to maintain an even hand in public in its relations with predominantly Shia Muslim Iran and Sunni Muslim Saudi Arabia.
During Prince Salman’s visit an Iranian minister threatened to send troops across the border in to Pakistan if Islamabad failed to secure the release of five Iranian border guards kidnapped in the country. Officials in Tehran alleged the guards were taken by hardline Sunni militants backed by Saudi Arabia. The Iranian guards have still not been released.
“We have to be careful in how we pursue our relations [with Saudi Arabia],” said Farooq Hameed Khan, a retired brigadier and commentator on security affairs. “As long as our security relations with Saudi Arabia are for internal security duties, that can be managed but we must not extend ourselves beyond that.”
The Saudi assistance may help to support Pakistan’s weak economy though it cannot fund a long-term recovery, economists said.
“The Saudi money for now has helped our reserves,” said Sakib Sherani, a former chief economist at the finance ministry. “But it’s early in the day. We need to build up on our progress. Pakistan’s economy needs to be put through other reforms too.”
Last year, the IMF agreed to a $6.7bn loan programme for Pakistan. However, western diplomats say, Pakistan is riddled with challenges, notably energy shortages and domestic insecurity, which continue to deter investors.
“In a country with major energy shortages, a low number of taxpayers and corruption in many areas, the Saudi money will help but only temporarily,” said one western diplomat in Islamabad.
http://www.ft.com/cms/s/0/d40980de-aa88-11e3-9fd6-00144feab7de.html
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