Easing the financial crunch

Signs of economic recovery are emerging on the country's horizon. Bilateral and multilateral donors are giving positive signals to ease Pakistan's financial and the balance of payments situation. Global political scenario is also fast emerging in Pakistan's favour as a result of the change of administration in the United States and the disastrous failure of India's Mumbai blast blame-game. This led Japan, the most trusted US ally, to mobilise financial resources to help improve the on-going financial crisis in Pakistan. For the international community, Pakistan's financial meltdown is crucial to keep the country on the path of democracy and to combat global terrorism. In his foreign policy address to the Diet last week, Japanese Foreign Minister, Hirofumi Nakasone, reiterated Japan's pledge to step up assistance to Pakistan to fight terrorism and stabilise its economy.
Japan is actively playing an important and active role in the Friends of Pakistan forum, providing assistance to Pakistan against War On Terror, development of FATA, and supporting Pakistan in obtaining loans from Asian Development Bank, IMF, and World Bank. During the current fiscal year, up to March 2009, Japan assistance has increased to US$500 and it will significantly increase during the up-coming fiscal year. Pakistan's Financial Adviser, Shuakat Tarin, undertook a two-day official visit to Japan on February 4-5 to appraise his Japanese counterpart, Finance Minister, Shoichi Nakagawa, and Japanese Prime Minister Taro Aso. Tareen unveiled a plan to Japanese leaders about the setting up a Special Economic Zone in Karachi, which would serve as a gateway to Central Asian and Middle Eastern markets for Japanese companies.
Moreover, Japan is willing to support mega projects in Pakistan. Coal, gas, and energy pipelines from Iran and Central Asia into Pakistan, and India and China are of immense importance. Japanese technology and capital could play a crucial role in materialising these projects.
Nevertheless, with this increased economic assistance, Pakistan-Japan relations have revived all-time high, better than the 1990s and the 1980s, to the level of the 1960s when Pakistan received massive Official Development Assistance (ODA) from Japan. However, at that time it was the country's massive industrialisation that pushed Japan to offer ODA to Pakistan even at the expense of other East Asian countries including South Korea and others. Therefore, a massive industrialisation programme, and to revive the sick industrial units, and spade-work on mega projects must be accelerated.