Richard Lister: Sanctions thought to be a clumsy punishment

The US says the move is a response to progress made by both countries towards curbing their nuclear weapons programmes.

A US Government official said there was concern over the detrimental effect that the sanctions were having, especially on Pakistan's economy.

Washington has also been pressuring both countries to sign up to the Comprehensive Test Ban Treaty (CTBT).

Previously, Pakistan has said it would sign the treaty if sanctions were lifted giving it access to foreign loans.

Loan hopes

The sanctions cut off all but humanitarian aid and stopped foreign funds, including a $1.56bn International Monetary Fund credit to Pakistan agreed a year ago.

Islamabad Correspondent Owen Bennett-Jones: "Finances in a parlous state"

The Pakistani Government is looking for new IMF loans to help it close a $5bn balance of payments deficit.

Pakistan's Foreign Minister said the partial lifting of sanctions gave the IMF and other agencies the authority to resume stalled lending programmes.

Sartaj Aziz said the US move sent a signal to the IMF, Asian Development Bank and World Bank to resume lending, which was stopped after Pakistan and India carried out nuclear testing in May.

An IMF spokesman said a team is leaving for Pakistan over the weekend to discuss a possible resumption of loans.

But India is making it clear that the partial lifting of sanctions will not lead to New Delhi signing the CTBT in the immediate future.

Krishan Lal Sharma, a spokesman for the ruling BJP Party, said: "The BJP feels that US thinking is on the right direction and they will ultimately understand India's concerns and withdraw all the sanctions."

The Sanctions lifted will allow:

• Access to US credit and development agencies

• The US to broker a deal between Pakistan and the IMF

• Some military personnel to receive training in the US

But the US is not lifting the ban on weapon sales and dual-use equipment such as computer technology.

President Clinton is expected to make a formal announcement of the sanctions reductions within the next few days.

Congress gave the president authority to lift some of the measures last month.

Richard Lister: "Both India and Pakistan can breathe a little easier"

The BBC's State Department Correspondent, Richard Lister, says sanctions will not be removed completely until both India and Pakistan sign up for international arms control regimes such as the Comprehensive Test Ban Treaty.

The BBC's South Asia Correspondent, Mike Wooldridge, says the timing of the decision is undoubtedly finely calculated.

Mr Clinton will soon be meeting Pakistani Prime Minister Nawaz Sharif in Washington.

And Indian and Pakistani officials are holding talks in Delhi at present on a whole range of issues dividing the two countries and potential confidence-building measures.

International outrage

Mike Wooldridge in Delhi: "Encouragement rather than reward"

India and Pakistan provoked world condemnation in May by carrying out nuclear tests, triggering economic sanctions by the US, Japan and other states.

India was the first to carry out the tests in the northern state of Rajasthan.

Pakistan, despite being urged by the international community not to retaliate, conducted five nuclear tests of its own in south western Baluchistan shortly after.