Pakistan’s Symbolic Strength Feats
Pakistani shares led Asia through April with an over 20 percent advance as the government looks to finish its term with leader Gilani only receiving a nominal court sanction for alleged corruption, and the Finance Ministry touted 4 percent GDP growth comeback during the annual IMF spring meeting without renewing a program plea. Repayments on the suspended original $10 billion arrangement will fall due in coming months as the reserve drop already exceeded 25 percent the past year on the trade deficit and uneven remittances which too have recently rallied. The rupee is off the 90/dollar low, but capital inflow in the current fiscal year is just $200 million although bargain prices have lured external bond investors. The exchange boost has been attributed to a tax decision protecting participants’ fund sources if they hold for several months in contrast to earlier revenue and money laundering mandates designed to raise the 10 percent of GDP collection take. A handful of consumer and infrastructure listings have reported good earnings despite electricity and credit slack, and a free-trade opening with India with bilateral commerce at $2.5 billion created excitement. Double-digit inflation lingers and the budget gap will again top 5 percent of GDP as domestic official borrowing rises at ten times the annual private sector pace. The delegation indicated during its Washington visit that a new US economic assistance pact was under negotiation which will emphasize anti-poverty as well as venture capital efforts for income and business support in recognition of the “negative development impact” of the decade-long war against Islamic extremists that has killed an estimated 45,000 civilians and soldiers there. Optimists point to an eventual “peace dividend” as now unfolding on the subcontinent in Sri Lanka with GDP growth at double Pakistan’s rate as monetary tightening damps inflation. It has succeeded with a $2 billion IMF standby which was extended through July after delays and liberalized foreign access to the high-yield local bond market to help bridge the large current account deficit. The currency has recovered and new prudential controls aim to curb rapid bank lending expansion.
Human rights investigations into civil war actions however continue to block full tourism and aid resumption in a pattern also touching neighboring Bangladesh, where the exchange has struggled to assert frontier momentum. Opposition figures and trade unionists have disappeared and been targeted by the Hasina Administration which returned to caretaker power under army guidance before scheduled elections in 2014. It managed 5 percent economic growth this fiscal year and just negotiated a $1 billion Fund credit line to cover spiking oil import costs. At the end of 2011 a suspected military coup led by Islamist proponents was thwarted on mixed evidence beyond consideration in principle.
