Pakistan closed the financial year with $15 billion (about Dh55 billion) in foreign exchange reserves, despite paying $1.2 billion to the International Monetary Fund (IMF). The country’s progression to a brighter economic future could benefit from a recent dialogue with India regarding a Pakistani cricket tour. Pakistan will be visiting India for the first time in five years. Both governments have been holding regular meetings in a bid to improve ties and reach a peace agreement.

Speaking this July, Commerce Secretary Munir Qureshi stated that under the Pak-India trade liberalisation programme, the removal of non-tariff-barriers is crucial to Pakistan. Furthermore, talks on importation of power from India were held in Lahore in July; while talks on the import of petroleum from Pakistan will be held in Delhi. The country will also benefit from India’s recent decision this month to allow Foreign Direct Investment by Pakistani citizens and companies.

Usman Khosa, a former IMF employee now with Bank of America Merrill Lynch, says, “Pakistan has more to gain from opening up trade with India than the other way around; policy makers should let animal spirits take hold rather than pummelling trade through policy or nepotism.”

US President Barack Obama has expressed his appreciation, saying, “President Asif Ali Zardari’s visit to India was encouraging. Increased trade and people-to-people contacts between Indians and Pakistanis can lead to greater understanding on both sides.”

Pakistan has a semi-industrialised economy that includes textiles, chemicals, food processing and agriculture. The economy has suffered from political disputes, a growing population, an ongoing confrontation with India; and now an involvement in the War on Terror. During the 1960s, Pakistan was seen as a model of economic development around the world and many countries sought to emulate its economic planning strategy — like South Korea, which employed Karachi’s Five-Year Plan while Seoul’s World Financial Centre is modelled after Karachi’s financial hub.

A large increase in the country’s public debt led to slower growth in the 1970s, and then in the 1990s. The economy recovered during the 1980s thanks to a policy of deregulation, as well as an increased inflow of foreign aid and remittances from expatriate workers.

Faisal Khan/Special to GN Focus

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