Pakistan

Pakistan counts cost of Taliban attacks on economy

LONDON: Taliban attacks have been costing Pakistan’s economy as much as $5 billion a year in lost investment, the country’s finance secretary said, adding that Islamabad is keeping open the option of another IMF programme.

Speaking as Pakistan officials met bond investors in London, Waqar Masood Khan stressed a lot was at stake in the latest $1.9 billion three-year military drive to rid the country of the violence.

“Our people have suffered terribly over the last 1-1/2 decades and we have lost out enormously in terms of economic opportunities and output because of this terrorism,” he told Reuters.

“We have seen in the past foreign (investment) inflows of $5-7 billion but today we are not even having $2 billion,” he said, noting that security costs and damage to the economy had to be added to that.

With the army making headway against the Taliban in North Waziristan, the situation was finally “reversing”.

Khan said Karachi for example seemed safer than at any time over the last decade and “exporters who met with the prime minister recently said their customers are now coming (to Pakistan)” again.

The Pakistan economy is benefitting from the near 60 percent drop in global oil prices, its biggest import. Its central bank has also been cutting interest rates while its IMF programme is clamping down on corruption.

GDP growth is expected to be 5.5 percent for the year to June 2016. Reserves are expected to top $20 billion, 4-5 months of import cover, this month or next.

“In the 1960s and 80s Pakistan achieved growth rates of 6-7 percent. We are held back by the internal problems and the terrorism. Once we have it under control we should really be a breakout country as justified by our potential,” he said.

IMF PROGRAMMES

Pakistan’s financial markets have been performing well for the most part and Khan said a coming debt sale, details of which should be announced later this week, could see it sell more than the originally envisaged $500 million.

“We are not fixated on the size, we can definitely do more and we are open with regards to the tenor too,” Khan said. “Last time we raised $2 billion.

“And we will do a sukuk (sharia-compliant bond) in … maybe the April to June quarter,” he added, also likely to be worth $500 million.

Power shortages cause daily outages for Pakistani firms and the government says it will take years to fix.

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