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Tuesday, 14 August, 2001, 16:31 GMT 17:31 UK
Boost for Pakistan economy?
President Pervez Musharraf
President Musharraf says the economy is back on track
President Musharraf's promise of a return to democracy could yet persuade investors to put their money in Pakistan.

Some may treat with scepticism his claim that the economy is back on track, following recent stock market weakness.

News of plans to create a stabilisation fund to inject 3 to 5 billion rupees ($50m to $80m) in the stock market may serve as a vote of confidence in the Pakistani stock market.

Muddassar Malik, a director of BMA Capital in Karachi told the BBC's World Business Report that this does "show the government wants to focus on the stock market and more importantly investor confidence".

Promise of funds

President Musharraf's address on democracy comes just a day after he presided over a meeting between government officials, the Ministry of Finance and the Securities and Exchange Commission.

They discussed ways of tackling the big decline in stock market levels in Pakistan.

Capital market reform, a new settlement system and new taxes have discouraged investors from putting their money in the stock market, Malik argues.

"The economic indicators do appear to be improving, what with the declining stock market, that appears to be a bit of an anomaly," BMA Capital's Muddassar Malik said.

"The IMF and World Bank financial programmes are back on track and that is something which suggests an element of financial discipline."

Troubled economy

In Tuesday's speech, President Musharraf also unveiled 20 infrastructure projects.

The projects, costing 80 billion rupees ($1.2bn) should create one million jobs by March next year.

When President Musharraf seized power in a coup in October 1999, he promised to revamp the country's crippled economy.

The state of the economy was in part what triggered the coup.

Pakistan's economic prospects took a turn for the worse, when the IMF and other international lenders halted new loans because of its nuclear tests.

This was a serious blow because Pakistan has some $30bn (27bn) of foreign debt and limited resources with which to pay it off.

Muddassar Malik, director BMA Capital
"The important thing is to bring investors back into the market"
See also:

14 Oct 99 | The Economy
Pakistan's economic nightmare
14 Aug 01 | South Asia
Pakistan's return to democracy set out
14 Aug 01 | South Asia
Musharraf's 'roadmap to democracy'
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