Pakistan

Politics:

• Analysis

  Pakistan politics: Jostling for power

  In recent weeks Pakistan's Supreme Court has once again locked horns with the government, setting the stage for renewed political conflict as the next election draws closer. The most recent dispute centres on the proposed reappointment of two judges to the High Court in the capital, Islamabad. Their terms expired on November 21st, and the government has declined to act on the recommendation of the Judicial Commission regarding the extension of their tenures. Under the leadership of the current chief justice, Iftikhar Chaudhry, the judiciary has sought to assert its authority over and independence from the executive. In doing so, it has clashed with the current government, led by the Pakistan People's Party (PPP), as well as with the previous president, Pervez Musharraf, and the country's powerful military. The court has achieved unprecedented autonomy, partly through populist judicial activism and the cultivation of support from both the media and the public. However, its powers of direct enforcement over the other branches of government remain limited and incomplete. Mr Chaudhry's campaign for judicial independence is indicative of the jostling for influence between Pakistan's various power centres, which will contribute to increased political instability in the medium term.

  Pakistan's judiciary has traditionally deferred to the executive branch of government, providing, for example, retroactive legal ratification of all of the country's military coups. Early in his tenure on the Supreme Court, Mr Chaudhry too joined other judges in approving Mr Musharraf's suspension of the constitution and his assertion of broad presidential powers following the military coup in 1999 that ousted the government headed by the Pakistan Muslim League-Nawaz (PML-N). However, following his promotion to the post of chief justice in 2005, Mr Chaudhry began to take an increasingly combative stance towards Mr Musharraf's regime. His independent pursuit of missing-persons cases in Balochistan-he is a native of the provincial capital, Quetta, and a former chief justice of the Balochistan High Court-is thought to have contributed to his dismissal from the helm of the Supreme Court in March 2007 by Mr Musharraf. That move sparked widespread protests and led Mr Musharraf to abrogate the constitution, placing Mr Chaudhry under house-arrest and declaring a state of emergency in late 2007. Those events culminated in the return of the PPP to power in February 2008 and Mr Musharraf's resignation from office in August of that year. Even after the return of a civilian government, it took further nationwide protests by the lawyers' movement and the PML-N before Mr Chaudhry was reinstated to his post by the current president, Asif Ali Zardari.

  An ongoing three-way fight

  Since then, the chief justice has headed an increasingly activist judiciary, embarking on a number of suo moto investigations that challenged both the government and the military (a practice that has also been followed on numerous occasions by the Supreme Court of India in its own bid for greater institutional authority). Under Mr Chaudry's leadership the Supreme Court has intervened on a host of issues, including the regulation of energy prices, privatisation deals and the treatment of minority groups. It has also continued to press the government and the armed forces on their response to the deteriorating security situation in Balochistan and in Pakistan's largest city, Karachi. Most prominently, the judiciary engaged in a two-year confrontation with the PPP government as it sought to have a corruption case against Pakistan's president reopened in Switzerland. Tensions stemming from the case, which centres on allegations that Mr Zardari accepted kickbacks from Swiss firms in the 1990s, were finally resolved in October this year, but not before one prime minister, Yusuf Raza Gilani, had been ousted by the Supreme Court in mid-2012 for failing to comply with its directive.

  The court has also locked horns with the army. In a landmark ruling in October, it found that former military officers had violated Pakistan's constitution by intervening in the 1990 general election, and ordered the prosecution of those responsible. The ruling appears to have provoked the ire of the army chief of staff, General Ashfaq Kayani, who in an opaque statement seemed to warn civilian institutions against trying to extend their authority too far; the military has traditionally sought exclusive control over the investigation of its own members.

  The judiciary has since shifted its focus to contemporary charges against the PPP government that it misused state funds to buy influence with parliamentarians in Punjab province in 2008-09; hearings on the case are expected to begin in early December. A parallel case being heard in the Lahore High Court also challenges Mr Zardari over his dual role as the country's president and the head of the PPP, as, under Pakistan's constitution, the president is barred from holding a political post.

  The stand-off over appointments

  The current dispute over the extension of the tenure of two judges goes to the heart of Mr Chaudhry's efforts to establish the judiciary as a body that is independent of executive control. The 18th and 19th amendments to the constitution (passed in April 2010 and January 2011 respectively) established new procedures for the appointment of high court judges. Following the revisions, a newly established Judicial Commission (JC), chaired by the chief justice and dominated by serving judges, was given the task of proposing nominees for vacant judicial posts. A separate parliamentary committee, whose membership is split evenly between the government and the opposition, must confirm these nominations. The rejection of a candidate requires a three-quarters majority of the committee, and in the absence of a rejection any nominee is deemed to have been confirmed within two weeks, irrespective of whether a vote on their candidacy has been held. The revisions have had the effect of consolidating the chief justice's control over the judiciary's composition and promotions process, reducing the ability of the president or the government to stock the courts with their own preferred candidates. However, the president is required to issue the formal notification of an appointment, extension of tenure, or promotion made by the JC and approved by the parliamentary committee.

  In the past week the government has declined to act on the JC's recommendation that the tenure of two Islamabad High Court judges be extended prior to the expiry of their appointments on November 20th. This raises the question of whether the president has the power to veto the JC's appointments, and has prompted the Supreme Court to warn the government that it may independently issue a formal notification if Mr Zardari fails to do so. The president's office has not elaborated on its reasons for ignoring the JC's recommendations. However, prior to their retirement the two judges in question had been set to open hearings on a separate petition challenging the government's move to offer an unprecedented three-year term extension for Mr Kayani in July 2010. The attorney-general, Irfan Qadir, has indicated that the government will seek a constitutional ruling from the Supreme Court on whether the president can accept or reject the recommendations made by the JC, setting the stage for another institutional showdown.

  Mr Chaudhry's judicial record and unprecedented personal popularity have enabled him to force the government to respond on several issues. However, the negotiation of judicial authority is an iterative and contested process. Pakistan's courts still have only limited powers of enforcement, particularly over the military. Mr Chaudhry's tenure expires in December 2013, making the institutionalisation of judicial autonomy a critical issue for the future balance of political power in Pakistan.

  November 28, 2012

• Background

  Pakistan: Political forces at a glance

  Present government: The Pakistan People's Party (PPP), which secured the most seats in the election to the National Assembly (the lower house of the federal parliament) in February 2008, leads a coalition government. Coalition management has become increasingly important. In 2011 the Muttahida Qaumi Movement (MQM) quit the ruling coalition, rejoined, and quit again. The PPP has secured a parliamentary majority by gaining the support of the Pakistan Muslim League (Q) or PML (Q), the party that supported the former military ruler who later became the country's civilian president, Pervez Musharraf. In the past year the role of the president (currently Asif Ali Zardari, the widower of Benazir Bhutto, a former prime minister and previous leader of the PPP who was assassinated in December 2007) has become increasingly marginal. The president is chosen by an electoral college of the Senate (the upper house) and the lower house, as well as by the four provincial parliaments. The prime minister, currently Raja Pervez Ashraf, is responsible for most day-to-day decisions, but the military is formally in charge of national security and informally dominates the country's most important foreign policy relationships (those with the US, Afghanistan and India). Provincial governments play an important role; Pakistan's most populous province, Punjab, is ruled by the Pakistan Muslim League (Nawaz), or PML (N), which sits in opposition in the federal parliament.

  The army will continue to wield significant informal political power

  The chief of army staff, General Ashfaq Kayani, has been adamant about the need to remove the military from politics and to leave the day-to-day running of the country to the civilian government. Nevertheless, there was intense speculation in early 2012 that the military might try to oust the government. The government came under severe pressure from the army because of the fallout from the so-called Memogate scandal, which centred on a memo that allegedly sought US help in preventing a possible military coup in mid-2011. The allegations greatly increased tensions between the civilian government and the military. Despite the overt hostility, the Economist Intelligence Unit has maintained its belief that an outright military takeover is unlikely, largely because there are numerous reasons that the army would prefer not to usurp power directly. However, the military is responsible for tackling the paramount threat posed by Islamist militants (as well as for facing down the perceived existential threat emanating from India). The army therefore still wields considerable informal political power. Meanwhile, a range of Islamist militant groups continue to undermine stability and security within Pakistan.

  Parliamentary forces
  (no. of seats in the National Assembly won in recent general elections)
  	Oct 2002	Feb 2008
  Pakistan People's Party	17	121
  Pakistan Muslim League (Nawaz)	18	91
  Pakistan Muslim League (Quaid-i-Azam)	118	54
  Muttahida Qaumi Movement	17	25
  Independents (incl 12 from federally administered tribal areas)	17	18
  Awami National Party	-	13
  Muttahida Majlis-i-Amal	59	6
  Pakistan Muslim League (Functional)	5	5
  Parties with one member	7	2
  Pakistan People's Party (Sherpao)	2	1
  Pakistan People's Party Parliamentarians	63	-
  National Alliance	16	-
  Pakistan Muslim League (Junejo)	3	-
  Total	342	342
  Source: Election Commission of Pakistan.

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  Next elections: Elections for the National Assembly are due by February 2013, and the next presidential election is due to take place in September 2013. An election for one-half of the seats in the Senate was held in March 2012; the next Senate election (also for one-half of the seats in the chamber) is due in March 2015.

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  July 27, 2012

• Structure

  Pakistan: Political structure

  Official name

  Islamic Republic of Pakistan

  Form of state

  Federal parliamentary democracy

  The executive

  Asif Ali Zardari was elected president in September 2008. The prime minister and head of government is Raja Pervez Ashraf, who was appointed to the post in June 2012

  National legislature

  The National Assembly (the lower house) has 342 seats, 272 of which are elected on a first-past-the-post basis. Of the remainder, 60 are reserved for women and ten for non-Muslim minorities; they are allocated, on the basis of proportional representation, to parties that win more than 5% of the directly elected seats. The Senate (the upper house) has 100 members. Of these, 22 are elected by each of the four provincial assemblies, eight are tribal representatives and four are representatives from the lower house

  National elections

  National Assembly: February 2008. The next National Assembly poll must be called by March 2013. President: September 2008. The next presidential contest is due to take place in September 2013. Senate: an election for one-half of the seats in the chamber was held in March 2012. The next Senate election (also for one-half of the seats) is due in March 2015

  National government

  The Pakistan People's Party (PPP) and the Pakistan Muslim League (Nawaz), or PML (N)-the two parties that won the largest numbers of seats in the National Assembly election in 2008-led a coalition government until August of that year, when the PML (N) left the coalition. From May 2011 the government consisted of a coalition led by the PPP and including the Pakistan Muslim League (Quaid-i-Azam), or PML (Q), and the Muttahida Qaumi Movement (MQM). The MQM then left the government in June 2011, but rejoined it in October that year

  Provincial government

  Elections for Pakistan's four provincial assemblies were held in 2008 alongside the National Assembly election. The provinces enjoy considerable autonomy, and this has caused tensions with the central government

  Main political organisations

  PPP; PML (N); PML (Q); Muttahida Majlis-i-Amal (MMA, which comprises six religious parties, including Jamaat-i-Islami and Jamiat-i-Ulema-i-Islami); MQM; National Alliance (comprising several small parties led by the Millat Party); Awami National Party; Pakistan Tehreek-e-Insaaf; Jiye Sindh Qaumi Mahaz

  President: Asif Ali Zardari

  Prime minister: Raja Pervez Ashraf

  Key ministers

  Commerce: Makhdoom Amin Fahim

  Defence: Chaudhry Ahmed Mukhtar

  Finance: Abdul Hafeez Sheikh

  Foreign affairs: Hina Rabbani Khar

  Industries & production: Manzoor Ahmed Wattoo

  Information & broadcasting: Firdous Ashiq Awan

  Interior: Rehman Malik

  Investment: Saleem Mandviwalla

  Labour & manpower: Khurshid Ahmed Shah

  Law, justice & parliamentary affairs: Babar Awan

  Privatisation: Naveed Qamar

  Central bank governor

  Yasin Anwar

  December 11, 2012

• Outlook

  Pakistan: Key developments

  Outlook for 2013-17

  • The current parliamentary term ends in March 2013. The next general election must be called before this deadline and then held within three months.
  • A government with a popular mandate from next year will improve political stability, although the political situation will continue to be volatile in 2013-17.
  • The US will remain an important source of military and civil aid to Pakistan. In the forecast period ties will remain overtly transactional, as the idea of a broad strategic bilateral partnership has been severely undermined.
  • The government will continue to miss its stated targets for fiscal consolidation in the short term. The budget deficit is forecast to narrow only slightly in fiscal year 2012/13 (July-June), to the equivalent of 6.2% of GDP.
  • The precarious state of the public finances and the country's weak external position mean that Pakistan will require IMF assistance (which will come with strict conditions attached) to avoid a balance-of-payments crisis.
  • Real GDP growth will remain lacklustre in 2012/13-2016/17, averaging 3.7% a year. Economic expansion will be constrained by the poor domestic security situation, structural imbalances and an ongoing electricity shortage.
  • A number of factors-including greater demand for US dollars to pay for oil imports, weak economic growth, persistently high inflation and the large fiscal deficit-will exert downward pressure on the Pakistan rupee in 2013-17.

  Review

  • An ongoing dispute over the reappointment of judges to the Islamabad High Court points to a renewed conflict between the judiciary and the executive.
  • A ruling by the Supreme Court that the government of Balochistan had failed to provide basic law and order has thrown the provincial government into turmoil. Calls for the resignation of the chief minister continue to grow.
  • The consumer price index rose by 6.9% year on year in November, the slowest pace of price increases since August 2007, largely driven by a moderation in food price inflation.
  • Figures released by the State Bank of Pakistan (the central bank) showed that the trade deficit widened to a four-month high of US$1.4bn in October. The current-account deficit narrowed to US$177m, from US$331m in September.
  • The Ministry of Finance recently released data for the government's fiscal operations in the first quarter of 2012/13, which indicate that the budget deficit had widened on a year-on-year basis, to PRs284bn (US$3bn).

  December 11, 2012

Economy:

• Background

  Pakistan: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	176.8	Population growth	1.8
  GDP (US$ bn; market exchange rate)	210.7	Real GDP growth	3.5
  GDP (US$ bn; purchasing power parity)	485.7b	Real domestic demand growth	2.7
  GDP per head (US$; market exchange rate)	1,192	Inflation	12.8
  GDP per head (US$; purchasing power parity)	2,747b	Current-account balance (% of GDP)	-3.9
  Exchange rate (av) PRs:US$	86.3	FDI inflows (% of GDP)	2.1
  a Actual. b Economist Intelligence Unit estimates.

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  Background: The Islamic Republic of Pakistan was founded in 1947. East Pakistan (now Bangladesh) seceded in 1971. Since independence there have been several military coups. The last was in 1999, when the chief of army staff, Pervez Musharraf, became the chief executive of Pakistan. In 2001 he became the country's president, and parliament re-elected him in October 2007. Mr Musharraf resigned as army chief in November 2007 and stood down as president in August 2008. The general election that took place in February 2008 resulted in a new coalition government led by the Pakistan People's Party and the Pakistan Muslim League (Nawaz); the latter party withdrew from the government in August 2008.

  Political structure: After a series of constitutional alterations in recent years that increased the powers of the president at the expense of parliament and the prime minister, parliamentary supremacy was restored in 2010 when both houses of the legislature approved a landmark constitutional amendment that reversed the changes of the previous few years. The National Assembly (the lower house of parliament) was elected in February 2008 for a five-year term. Provinces are represented in the National Assembly in proportion to the size of their populations. An election to the Senate (the upper house), in which the four provinces have equal representation, was held in March 2012. Senators serve terms of six years, and one-half of the seats in the upper house come up for re-election every three years. The next general election is due to be held in 2013.

  Policy issues: Mr Musharraf oversaw the gradual liberalisation of the economy, but political instability, civil unrest and the threat of terrorist violence have damaged the business operating environment since 2008. The government will need to reassure foreign investors and promote growth in foreign investment inflows. Long-term economic stability will depend on speeding up the privatisation programme, achieving growth in exports and maintaining official inflows of remittances. In the early part of the forecast period policy will focus on reducing the fiscal deficit and taming inflation.

  Taxation: The highest income tax rate stands at 25% and the lowest at 0.25%. The corporate tax rate is a uniform 35%. Non-residents are exempt from tax on income earned from stocks and government securities.

  Foreign trade: Merchandise exports (fob) stood at US$26.3bn in 2011, while imports (fob) totalled US$38.9bn in that year, resulting in a trade deficit of US$12.6bn.

  Major exports 2010/11a	% of total	Major imports 2010/11a	% of total
  Knitwear	10.6	Petroleum products	23.2
  Cotton cloth	9.6	Crude petroleum	11.2
  Rice	8.4	Palm oil	5.2
  Bed wear	8.0	Iron & steel	3.4
  Leading markets 2010/11a	% of total	Leading suppliers 2010/11a	% of total
  US	16.3	UAE	16.2
  Afghanistan	7.4	Saudi Arabia	12.4
  UAE	7.2	China	11.6
  UK	5.1	Kuwait	8.3
  a State Bank of Pakistan; fiscal years July-June.

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  December 12, 2012

• Structure

  Pakistan: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 11, 2012

• Outlook

  Pakistan: Country outlook

  Pakistan: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: In recent years Pakistan's civilian executive has been competing for influence with the country's powerful military and its increasingly assertive judges, thereby setting the stage for growing political conflict. Under the leadership of the current chief justice, Iftikhar Chaudhry, the judiciary has intervened on a raft of issues, including the regulation of energy prices, privatisation deals and the government's treatment of minority groups. Most prominently, the judiciary engaged in a two-year confrontation with the ruling Pakistan People's Party (PPP) as it sought to have a corruption case against the president, Asif Ali Zardari, reopened in Switzerland. Tensions stemming from the case, which centred on allegations that Mr Zardari accepted kickbacks from Swiss firms in the 1990s, were finally resolved in October this year, but not before one prime minister, Yusuf Raza Gilani, had been ousted by the Supreme Court in mid-2012 for failing to comply with its directive. In view of the subsequent rapprochement between the court and Mr Gilani's successor, Raja Pervez Ashraf, the Economist Intelligence Unit expects the PPP-led government to complete its five­year term, which ends in March 2013. This would make it the first democratically elected Pakistani administration to see out its term.

  ELECTION WATCH: The PPP performed well in the indirect election to the Senate (the upper house of parliament) held in March 2012. Constitutional amendments-a regular occurrence in recent years-require two-thirds support in both legislative chambers, and the PPP's strong representation in the upper house will protect it from unfavourable changes to the charter even if it loses its majority in the National Assembly (the lower house) at the next election.

  INTERNATIONAL RELATIONS: The US will remain an important source of military and civil aid to Pakistan. However, the bilateral relationship, which has been volatile in recent years, deteriorated in 2011. The killing in Pakistan in 2011 by US special forces of Osama bin Laden, who led the al-Qaida global terror network, and allegations that the country's main intelligence agency, the Inter-Services Intelligence, has been involved in terrorist attacks in neighbouring Afghanistan have refocused international attention on the question of whether Pakistan's government and its agencies have the will and the capacity to combat Islamist terrorism. The death of 26 Pakistani soldiers in a NATO air strike in November 2011 led to a re-evaluation of ties by both sides. Despite a formal apology for the NATO air attack by the US secretary of state, Hillary Clinton, in July 2012, significant sources of stress in the relationship remain, including the US's campaign of drone strikes in north-western Pakistan, which has been criticised by Pakistani politicians. We continue to forecast that bilateral ties in the years ahead will be more overtly transactional, as the idea of a broad strategic partnership has been severely undermined. In this context, Pakistan will welcome further offers of investment and aid from China, a relatively uncritical ally.

  POLICY TRENDS: Pakistan entered into a Standby Arrangement (SBA) with the IMF in November 2008 to support its balance of payments. The three-year programme was terminated early, in September 2011, with only US$7.4bn (out of an approved total of US$11bn) having been disbursed and the Fund criticising Pakistan's administration for failing to reduce its budget deficit. Economic fundamentals remain weak, and it thus looks increasingly likely that the government will need to negotiate a fresh lending programme with the IMF in the next 12 months. Between November 2012 and December 2013 the government will need to repay an estimated US$4.2bn to the Fund (by the end of October this year it had paid back around US$1.6bn of the money drawn down under the SBA), placing further strain on its finances. Fiscal consolidation, which is urgently needed to improve macroeconomic stability, is unlikely to occur until after the next general election. Taming inflation and implementing structural reforms to support economic growth will remain policy priorities, at least on paper, although poor governmental effectiveness will hamper progress on these fronts.

  ECONOMIC GROWTH: Real GDP growth has been constrained by the volatile security environment, structural imbalances in the economy and ongoing electricity shortages. In fiscal years 2007/08-2011/12 (July-June) real GDP growth on an expenditure basis averaged only 3.2% a year, well below the annual rate of 6.3% recorded in the previous five years. In 2012/13-2016/17 growth will remain lacklustre, averaging 3.7% a year. Private consumption, which now accounts for just under 90% of nominal GDP, will remain the primary driver of economic expansion in the forecast period. We expect expenditure on investment to contract for the fifth consecutive year in 2012/13. Investment spending as a proportion of nominal GDP has almost halved in the past five years, from 20.5% in 2007/08 to 10.9% in 2011/12, owing to tightness in local credit markets and a lack of foreign financing (exacerbated by both the global economic slowdown and the poor domestic security situation). Government consumption growth, which reached 8.2% in 2011/12, will accelerate to 9% in 2012/13 as the government continues to spend liberally in the run-up to the general election. We expect a sorely needed programme of fiscal consolidation to commence following the poll, most likely linked to a new IMF assistance package. Government consumption growth is therefore expected to moderate to 3.7% a year on average in 2013/14-2016/17. On a national-accounts basis, we expect the external balance to subtract from GDP growth throughout the forecast period.

  INFLATION: The burgeoning fiscal deficit, the weak Pakistan rupee and entrenched inflationary expectations will stoke price pressures in the forecast period. The government, while pledging to keep net borrowing from the SBP at zero, continues to borrow heavily from local banks to finance its budget deficit. We expect consumer price inflation to average 8.1% a year in 2013-17, down from an estimated 9.7% in 2012, as supply-side improvements reduce price pressures slightly. However, our forecast is subject to significant downside risks. A failure to undertake fiscal consolidation, a renewed surge in global oil and food prices, or inclement weather that reduces domestic agricultural output in any given year could cause inflation to exceed our forecast.

  EXCHANGE RATES: In the forecast period a number of factors will exert further downward pressure on the Pakistan rupee, which depreciated by an estimated 7.4% against the US dollar in 2012. They include greater demand for US dollars (stemming from the need to pay for oil imports), the necessity of making debt repayments, persistently high inflation, weak economic growth, the large fiscal deficit and falling inflows of foreign funds. We therefore expect the local currency to depreciate against the US dollar by 1.5% a year in the forecast period and to average PRs100.7:US$1 in 2017.

  EXTERNAL SECTOR: Merchandise export revenue growth will rebound to an average of 10.7% a year in 2013-17, having contracted by an estimated 8.3% in 2012. Growth will be driven by the depreciation of the Pakistan rupee (which makes the country's exports more competitive) and a gradual global economic recovery. Import growth, which slowed to an estimated 2.5% in 2012 owing to the weak currency and a continued fall in investment spending, will average 11.3% a year in 2013-17.

  December 07, 2012

• Forecast

  Pakistan: Country forecast summary

  Country forecast overview: Highlights

  • The current parliamentary term expires in March 2013. Barring any extensions (the constitution allows a six-month reprieve for the old legislature, although this requires the opposition's agreement), a general election must be called by then and held within three months. Following the poll, a government with a popular mandate will improve political stability, although the political environment will remain volatile and fractious in 2013-17.
  • The US will continue to be an important source of military and civil aid to Pakistan. However, the bilateral relationship, which has been volatile in recent years, deteriorated in 2011 and will remain strained. In 2013-17 ties with the US will be more overtly transactional, as the idea of a broad strategic partnership has been severely undermined. In this context, Pakistan will welcome offers of investment and aid from China, a relatively uncritical ally.
  • The government's approach to fiscal policy is characterised by the setting of demanding targets that are invariably missed. Fiscal consolidation, which is urgently needed to improve macroeconomic stability, is unlikely to occur until after the 2013 election. Taming inflation and implementing structural reforms to support economic growth will remain policy priorities, at least on paper, although poor governmental effectiveness will hamper progress on these fronts.
  • GDP growth has been constrained by the volatile security environment, structural imbalances in the economy and an ongoing electricity shortage. Real GDP growth on an expenditure basis averaged only 3.2% a year between fiscal year 2007/08 (July-June) and 2011/12, compared with 6.3% in the previous five years. In 2012/13-2016/17 growth will remain lacklustre, averaging 3.7% a year.
  • Pakistan's external position appears precarious in the short term. Foreign-exchange reserves have declined steadily since June 2011 and are expected to fall to US$10bn by end-2012. In addition to the growing trade deficit, the weakening currency and debt repayments to the IMF have taken their toll on Pakistan's external position. Principal repayments to the Fund are due to rise to US$3.7bn in 2013, and the situation thus looks perilous.
  • The Economist Intelligence Unit's central forecast is that the government will secure a fresh assistance package from the IMF, in the form of a renegotiated repayment schedule and, potentially, a new lending programme. In the absence of such financial arrangements, a balance-of-payments crisis is likely in the next 12-18 months.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%; fiscal years ending Jun 30th)	4.2	3.5	3.5	3.8	4.1	3.6
  Consumer price inflation (av; %)	9.7	8.6	5.7	6.8	9.4	9.8
  Budget balance (% of GDP; fiscal years ending Jun 30th)	-6.6	-6.2	-5.4	-5.1	-4.8	-4.7
  Current-account balance (% of GDP)	-1.7	-2.1	-2.0	-2.3	-2.2	-2.2
  Short-term interest rate (av; %)	10.7	9.4	8.6	8.5	9.5	10.4
  Exchange rate PRs:US$ (av)	93.2	95.7	98.0	98.9	100.0	100.7
  Exchange rate PRs:¥100 (av)	117.4	115.9	113.0	111.2	108.5	110.2

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  December 12, 2012

View detailed map

Country Briefing

Land area

769,095 sq km

Population

179m (current estimate, Population Census Organisation)

Main towns

Population in millions, June 2003

Karachi: 10.1

Lahore: 5.6

Faisalabad: 2.3

Climate

Subtropical, cold in highlands

Weather in Karachi

Hottest month, June, 28-34°C (average daily minimum and maximum); coldest month, January, 13-25°C; driest month, October, 1 mm average monthly rainfall; wettest month, July, 81 mm average rainfall

Languages

Urdu is the national language. English is widespread in business circles and as a second language

Measures

Imperial system, changing to metric. Local measures include 1 seer = 0.933 kg; 1 maund = 40 seers = 37.32 kg

Numbers are still commonly expressed in crores and lakhs: 1 crore = 10m, written 1,00,00,000; 1 lakh = 100,000, written 1,00,000, although in 1978 the internationally accepted system of millions, billions and so on was introduced

Currency

Pakistan rupee (PRs); PRs1 = 100 paisa. Average exchange rate in 2011: PRs86.3:US$1

Time

5 hours ahead of GMT

Fiscal year

July 1st-June 30th

Public holidays

February 4th (Eid-i-Milad-un-Nabi); March 23rd (Pakistan Day); May 1st (Labour Day); August 14th (Independence Day); August 19th (Eid al-Fitr); October 26th (Eid al-Adha); November 9th (Allama Iqbal Day); November 24th (Ashura); December 25th (birth of Quaid-i-Azam). (Ashura, Eid-i-Milad-un-Nabi, Eid al-Fitr and Eid al-Adha are dependent on the Islamic lunar calendar, and their dates may therefore vary slightly from those listed)

March 23, 2012