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To: Alex who wrote (42797)	10/12/1999 5:04:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116844

Pakistan closes its banks Pakistan has previously closed its banks during a crisis Pakistan's central bank has declared Wednesday a holiday in an attempt to stem any economic panic in the country following the coup attempt. Pakistan Television quoted a statement from central bank Governor Muhammad Yaqub as saying October 13 would be a bank holiday. Poverty and unemployment are widespread The fears of economic chaos, including a possible flight of capital abroad, may be well-founded. The coup attempt in Pakistan has taken place as the government has been trying to cope with serious economic problems. Foreign investment is in short supply, unemployment is high and the International Monetary Fund (IMF) predicts the economy will slow down sharply. IMF blocks loan Pakistan's economic prospects took a turn for the worse last year, when the IMF and other international lenders halted new loans because of its tests of nuclear weapons. This was a serious blow because Pakistan has some $30bn of foreign debt and limited resources with which to pay it off. The IMF later relaxed its sanctions, but the respite was brief. On September 23 it again began withholding money from its $1.6bn loan to Pakistan, saying the government must first carry out reforms to its chaotic finances. The taxation system has come in for particular criticism from the IMF. Little money is collected, with only about one per cent of people paying income tax. The opposition has made much capital out of government plans to introduce a general sales tax of 15%, similar to the UK's VAT. Huge demonstrations in September by small businessmen persuaded the government to retreat. Much of the money that is received goes on servicing the government's debts and on its large defence budget. The relationship with the military - both its spending and its actions -is clearly problematic. Business alienated Many Pakistani businessmen have been disappointed with the government of Nawaz Sharif. They say there's little incentive for them to invest, and some say that the investment climate is noticeably more favourable in neighbouring India, which has begun liberalising its economy. The attitude of the government has also angered foreign firms. They have complained that the government has favoured the state-owned power generator over foreign firms. One of the largest, Hub Power, has called on Pakistan to honour a government guarantee to compensate it for losses. If Pakistan doesn't pay up, it could be declared in default, which would end its ability to borrow from any private financial institution. Pakistan closes its banks Pakistan has previously closed its banks during a crisis Pakistan's central bank has declared Wednesday a holiday in an attempt to stem any economic panic in the country following the coup attempt. Pakistan Television quoted a statement from central bank Governor Muhammad Yaqub as saying October 13 would be a bank holiday. Poverty and unemployment are widespread The fears of economic chaos, including a possible flight of capital abroad, may be well-founded. The coup attempt in Pakistan has taken place as the government has been trying to cope with serious economic problems. Foreign investment is in short supply, unemployment is high and the International Monetary Fund (IMF) predicts the economy will slow down sharply. IMF blocks loan Pakistan's economic prospects took a turn for the worse last year, when the IMF and other international lenders halted new loans because of its tests of nuclear weapons. This was a serious blow because Pakistan has some $30bn of foreign debt and limited resources with which to pay it off. The IMF later relaxed its sanctions, but the respite was brief. On September 23 it again began withholding money from its $1.6bn loan to Pakistan, saying the government must first carry out reforms to its chaotic finances. The taxation system has come in for particular criticism from the IMF. Little money is collected, with only about one per cent of people paying income tax. The opposition has made much capital out of government plans to introduce a general sales tax of 15%, similar to the UK's VAT. Huge demonstrations in September by small businessmen persuaded the government to retreat. Much of the money that is received goes on servicing the government's debts and on its large defence budget. The relationship with the military - both its spending and its actions -is clearly problematic. Business alienated Many Pakistani businessmen have been disappointed with the government of Nawaz Sharif. They say there's little incentive for them to invest, and some say that the investment climate is noticeably more favourable in neighbouring India, which has begun liberalising its economy. The attitude of the government has also angered foreign firms. They have complained that the government has favoured the state-owned power generator over foreign firms. One of the largest, Hub Power, has called on Pakistan to honour a government guarantee to compensate it for losses. If Pakistan doesn't pay up, it could be declared in default, which would end its ability to borrow from any private financial institution. news.bbc.co.uk