Pakistan ‘needs help’ on economy

Asif Ali Zardari faces huge challenges if he becomes president

Pakistan needs a “substantial” injection of external funds if it is to improve its worsening economic situation, an IMF official has said.

Mohsin Khan said Pakistan had not yet requested help from the IMF, which some economists have called for, to address a growing balance of payment crisis.

A falling rupee, soaring inflation and dwindling currency reserves are among Pakistan’s mounting economic problems.

Mr Khan said ministers planned to cut borrowing and tap donors for support.

Economic distress

Stabilizing Pakistan’s faltering economy will be one of the main priorities for Asif Ali Zardari, who is widely expected to be elected president following elections this weekend.

Pakistan’s public finances have deteriorated in the past 18 months amid political instability and violence which culminated in the resignation of former President Musharraf last month.

It seems the government is not getting its act together Yang-Myung Hang, Lehman Brothers

The rupee has fallen to a record low against the dollar while currency reserves have shrunk from $16.5bn ten months ago to $9.38bn.

The soaring cost of oil imports has eaten into the country’s reserves while the spiraling rate of inflation, which has risen to 25%, has sparked public anger.

Growth in the economy, which performed strongly in the early years of the Musharraf era, is expected to fall to a six-year low this year.

Pakistan’s fragile coalition government is pursuing a range of options to bolster confidence in the economy, including seeking $1bn in loans from the World Bank and the Asian Development Bank.

It is also in talks with Saudi Arabia to defer payment on an estimated $5.9bn of oil it has purchased.

Security concerns have put off some investors

Some economists believe it is inevitable Pakistan will have to turn to the IMF for help should it find itself struggling to pay its creditors.

Such a move could prove unpopular as any IMF funding would likely require undertakings to slash government borrowing and spending.

On the other hand, such a scenario is unlikely to materialise given the level of US financial and logistical support for Pakistan, a key ally.

Seeking stability

The IMF said it was encouraged that the government was committed to measures to improve its financial position, including privatizing assets and raising funds from the international markets.

“If measures outlined are implemented and sufficient financing is secured quickly,” Mr Khan – director of the IMF’s Middle East and Central Asia Department said, “the authorities could stabilize the economy this year and start to build up reserves.”

Despite attempts by the country’s central bank to reassure foreign investors, concerns remain about the new government’s ability to tackle multiple security and economic challenges.

“It seems the government is not getting its act together, making it difficult to actively address the decline in forex reserves,” said Yang-Myung Hang, a sovereign rating analyst at Lehman Brothers.

Pakistan bombers hit arms factory

The emergency services rushed to the scene of the bombings

At least 55 people have been killed in twin suicide bombings outside a munitions factory in the Pakistani town of Wah, police say.

The attack is the deadliest on a military site in Pakistan’s history.

The bombs hit the city, 30km (18 miles) north of Islamabad, as workers left. Many people were injured.

A spokesman for the Pakistani Taleban said they had carried out the attacks, which he said were a response to army violence in the country’s north-west.

Speaking to the BBC, Maulvi Umar of the Tehrik-e-Taleban Pakistan said the bombings in Wah were in retaliation for the deaths of “innocent women and children” in the tribal area of Bajaur.

He said more attacks would take place in Pakistan’s major urban conurbations unless the army withdrew from the tribal areas.

Correspondents say Wah, in the province of Punjab, is a strategically important town normally under heavy security as it is home to a large industrial complex producing conventional arms and ammunition.

Local police chief Nasir Khan Durrani told : “Many others have been injured and we expect casualties to rise in the coming hours.

“At least 25 people have been critically injured.”

Mr Durrani said none of the dead was military personnel.

‘Disturbing’

The first blast took place outside the gate of the factory as workers were leaving work during a shift change.

Minutes later, another blast took place at another gate of the same factory.

Tanks used by the Pakistani army are made at Wah

Mohid Ahmed, a student from Wah, was on a tour of the ordnance factories and witnessed the immediate aftermath of the blast from his bus.

“It was very disturbing,” he told.

“There was smoke, bodies and blood. Those who were left alive were in great suffering. I saw a man clutching his leg and crying in pain and asking for help. I saw people running away from the scene.”

On Tuesday, 32 people were killed in a suicide attack on a hospital in the northern town of Dera Ismail Khan.

It is the second recent direct attack on a Pakistani military installation.

Last September, 17 officers and soldiers were killed in a suicide attack on a special forces base in the nearby town of Tarbela-Ghazi.

The ordnance factories at Wah lie on the road into Pakistan’s troubled north-west, where fighting between security forces and Islamic militants has raged in recent weeks.

Established in the early 1950s, it is a sprawling complex manufacturing everything from tanks and small arms to artillery shells.

Militants have often threatened to increase the level of violence unless the army pulls back from tribal areas close to the border with Afghanistan.

On Monday, President Musharraf, a key ally of President Bush’s “war on terror” resigned after nine years in power to avoid being impeached.

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Musharraf faces impeachment bid

President Musharraf has said he would rather resign than be impeached

Pakistan’s ruling coalition parties say they will begin impeachment proceedings against President Pervez Musharraf.

Party leaders Asif Ali Zardari and Nawaz Sharif made the announcement after three days of talks. They would need a two-thirds majority to impeach.

Mr Musharraf took power in a bloodless coup in 1999.

He gave up control of the army last year and his allies were defeated in February’s elections but he retains the power to dissolve parliament.

Mr Musharraf has previously said he would resign rather than face impeachment proceedings.

But late on Thursday, aides said the president would respond to the allegations in parliament.

The BBC’s Mark Dummett in Islamabad says an impeachment would take Pakistani politics into new territory, since no Pakistani leader has faced it before.

Sacked judges

Mr Zardari, of the Pakistan People’s Party (PPP), and the PML-N’s Narwaz Sharif announced the impeachment move at a press conference in Islamabad.

STEPS TO IMPEACHMENT Impeachment proposers need 50% majority in Senate or National Assembly President given notice of impeachment, and has three days to respond Joint session of Senate and Assembly must be held between 7 and 14 days later to investigate charges If resolution presented, joint session must approve with two-thirds majority Musharraf’s options

Mr Zardari said: “We have good news for democracy. The coalition believes it is imperative to move for impeachment against General Musharraf.”

Mr Zardari, the widower of assassinated former prime minister Benazir Bhutto, derided Mr Musharraf’s economic policies, adding: “He has worked to undermine the transition to democracy.”

He also warned Mr Musharraf not to dissolve parliament, saying: “If he does it, it will be his last verdict against the people.”

Mr Sharif said: “Pakistan cannot afford to see democracy derailed, this is not the same Pakistan as was the case in the 1980s and 1990s. People will not accept it now.”

The leaders say they will also move to have Mr Musharraf face votes of confidence in the national and four provincial assemblies.

Our correspondent says these will not be enough to dislodge President Musharraf but might weaken him ahead of any impeachment showdown.

Impeachment would need a two-thirds majority in the upper and lower houses of parliament but, our correspondent says, getting those numbers might be difficult.

The two leaders also promised to restore judges sacked under Mr Musharraf’s emergency rule once impeachment was successful.

How to proceed on that issue had caused deep divisions between the two coalition parties since the elections.

Military role

Mr Musharraf had been scheduled to attend the opening of the Olympic Games in Beijing but has cancelled his trip and will be replaced by Prime Minister Yousef Raza Gilani.

Mr Musharraf was elected president for a five-year term last October in a controversial parliamentary vote.

One presidential source told AFP news agency Mr Musharraf was discussing a course of action and had the options of dissolving parliament or imposing emergency rule again.

The president is still thought to have heavy influence over the military and its reaction will remain crucial.

Pakistan has been ruled by military leaders for more than half of its existence since Partition in 1947.

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