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Pakistan Afghanistan COUNTRY REPORT Pakistan Afghanistan 3rd quarter 1996 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 40 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, USA Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (USA) Tel: (44.171) 266 2202 DIALOG (USA) SilverPlatter (USA) Tel: (1.415) 254 7000 LEXIS-NEXIS (USA) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1996 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 0269-7173 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Summary Pakistan, Afghanistan 3rd quarter 1996 August 30, 1996 Pakistan Political and economic structures pages 3-4 Outlook: Benazir Bhutto’s government wants to be the first elected govern- ment to complete its term of office. The budget for 1996/97 has galvanised the opposition, but there are problems over what strategy to follow to topple the government. The army is becoming concerned about the economy. Ms Bhutto’s appointment of her husband as investment minister will cause problems. The government’s growth forecast is ambitious, particularly as ind- ustry continues to suffer. The current-account deficit will continue to rise. The government is likely to get an IMF stand-by loan at the World Bank/IMF conference in late September. pages 5-8 The political scene: A new opposition group has been formed. A judicial decision has caused problems for the government and has split the judiciary. The Supreme Court has restored local bodies in Punjab. Imran Khan’s political movement has yet to take shape. There have been family troubles for Ms Bhutto, involving her brother. Ms Bhutto has held a rally in Karachi as violence in the city eases, but bombings in the Punjab have continued. The PPP has done well in provincial elections in Pakistan-controlled Kashmir. A major airforce deal has provoked controversy. There has been little progress towards talks with India. The US ambassador to India has visited Pakistan. There has been progress with the Afghan government. pages 9-16 Economic policy and the economy: The budget for fiscal 1996/97 has increased expenditure by 15.1% and has raised taxes, only to be forced to lower them after widespread protests. GDP growth targets for 1996/97 are ambitious. Inflation has slowed. The IMF deal has been stalled because the budget has not been finalised. An economist for the World Bank has painted a grim picture of the country’s prospects. pages 16-18 Agriculture: The budget has smiled on landowners again. Agriculture output has risen, as has cotton production. Wheat cultivation has improved slightly, but sugar production has done less well. The Agricultural Development Bank has recovered. pages 18-19 Industry: Industry has been divided over the budget concessions. The Textile Mills Association has criticised the government’s export targets. The president has entered into the cotton debate. The cement industry has not been happy about the new taxes in the budget. Investment in industry has grown. pages 20-21 EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 2 Energy, and transport and communications: The Kott Adu power-plant deal has been finalised. The Privatisation Commission has said that bids for eight electricity distribution units will be allowed soon. The manufacture of a new power barge has been funded by the USA. The Iranian oil minister has signed two agreements. Partial privatisation of the Pakistan Telecommun- ications Company has stalled. pages 21-23 Banking and finance, and foreign trade and payments: A commission is to be set up to investigate loans. Exports have been growing slowly, but imports have been growing rapidly. Remittances have fallen sharply. pages 23-24 Afghanistan Political and economic structures pages 25-26 Outlook: The interim government will have to work hard to stay together. General Dostam’s position will be crucial to its survival. The Taliban are look- ing weak, but can still pose a threat to the government. The prime minister is expected to move against the Taliban. Relations with Pakistan are likely to improve, which will further isolate the Taliban. The UN is trying to restore its credibility. The local currency will remain very weak. pages 27-30 Review: Gulbuddin Hekmatyar has been appointed prime minister and has formed a new government. Jamiat’s Ahmad Shah Massoud and Mr Hekmatyar have no faith in each other. Mr Hekmatyar has announced Islamic policies. Government moderates have clashed with fundamentalists. Burhanuddin Rabbani has wooed the Nangarhar Shura, but has failed to bring them on board. Fighting has erupted in Nangarhar. The government has turned to General Dostam. The Taliban have continued their opposition against the government, but have improved relations with Iran. Iran has offered economic help. Pakistan has shifted its Afghan policy. pages 30-33 Statistical appendices pages 34-35 Editor: David Bain All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Pakistan 3 Political structure: Pakistan Official name: Islamic Republic of Pakistan Form of state: federated parliamentary system The executive: the president is head of state, and is elected for a period of five years by a joint sitting of the federal legislature; the incumbent, Farooq Leghari, has pledged to support moves by the PPP government to deprive him of the important discretionary powers he has under the eighth amendment National legislature: bicameral legislature; lower house, the National Assembly, has 217 directly elected members who serve for five years, of whom ten represent minorities; upper house, the Senate, has 87 members elected for six years with one-third retiring every two years; each of the four provinces elects 19 senators, the remaining 11 are elected from the Federal Capital Territory and the tribal areas Provincial government: Pakistan has four provinces which enjoy considerable autonomy; each province has a governor, and a Council of Ministers headed by a chief minister elected by a provincial assembly Last national election: October 6, 1993 (National Assembly) Next elections due: October 1998 (National Assembly); November 13, 1998 (presidential) National government: after the election on October 6, 1993, the PPP, backed by a coalition of small parties and independents, formed the national government with Benazir Bhutto as prime minister Main political organisations: Pakistan People’s Party (PPP); Pakistan Muslim League (Nawaz) (PML (N)); Pakistan Muslim League (Chattha) (PML (C)); Jamaat-i-Islami (JI); Mohajir Quami Movement (MQM); Awami National Party (ANP); Jamiat-e-Ulema-e-Islam (JUI) Main members of Council of Ministers Prime minister & minister of finance Benazir Bhutto Key ministers agriculture Yousuf Talpur commerce Ahmad Mukhtar defence Aftab Shaban Mirani education Khursid Ahmad foreign affairs Sardar Asif Ali information Khalid Kharal interior Nasirullah Baber investment Asif Ali Zardari parliamentary affairs Sher Afgan Niazi petroleum Anwer Saifullah population welfare Julius Salik production Mohammad Asgar states & frontier regions Mohammad Afzal Khan water & power Mustafa Khar works Amin Fahim Governor of the State Bank of Pakistan Mohammad Yaqub EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 4 Pakistan Economic structure: Pakistan Latest available figures Economic indicators 1991 1992 1993 1994 1995a GDP at market pricesb PRs bn 1,020.6 1,211.3 1,341.9 1,564.9 1,835.9 Real GDP
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