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Pakistan has a lot at stake in $2b anti-terror drive

London - Taleban attacks cost economy $5b a year in lost investment.

Taleban 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 said.
"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 Taleban terrorists 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 per cent 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 per cent 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 per cent. 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.
Pakistan's financial markets have been performing well for the most part and Pakistan has recently raised $500 million through Euro bond sale.
"We will do a sukuk (Shariah-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.
The rupee is holding up better than many emerging market currencies, down less than 2 per cent over the last year, which is hurting exporters.
Eleven out of 12 IMF programmes Pakistan has had since 1998 have been scrapped or abandoned because the government failed to implement reforms.
It will be viewed as a great success if the current one, due to run until September next year, goes the full distance. "At this stage it is not clear what we will do, we will cross that bridge when we come to it," Khan said. "A fund programme is meant to eventually be graduated from and you go it alone, but you never know what how the conditions will evolve and whether there would be any need for a new programme or not." - Reuters