Pakistan's economy is likely to meet the government target of 7.0 percent growth in the fiscal year ending June 30, an economic adviser to the country's prime minister said on Saturday.
"There are all indications that we are achieving the target," Ashfaque Hasan Khan, an adviser to Prime Minister Shaukat Aziz, told Reuters in an interview on the sidelines of the annual meeting of Asian Development Bank in Kyoto, western Japan.
He also predicted that foreign investors' confidence in Pakistan will remain solid and said it has not been hurt by a judicial crisis that has rocked the nation for the past two months.
Foreign investors, attracted by the country's solid growth as well as privatisation and other structural reforms, remain upbeat on the economy, Khan said, pointing to the strong performance of Pakistani shares.
The Karachi Stock Exchange benchmark 100-share index hit a all-time high on Friday, shrugging off the latest legal crisis that is regarded as presenting the biggest challenge to President Pervez Musharraf's authority since he came to power in a military coup in 1999.
Musharraf suspended independent-minded Chief Justice Iftikhar Chaudhry and ordered a panel of judges to hold an inquiry into misconduct charges against him on March 9, drawing protests from lawyers and activists who see Musharraf's attempt to sack Chaudhry as an attack on the judiciary's independence. "This has not dented investors' confidence as people had expected," Khan said.
"This year we will see a record inflow of foreign investments. It is beyond our expectation," Khan said, pointing to a net inflow of $5.6 billion during the July-March period. Of the total, net foreign portfolio investment inflows totalled $1.0 billion, more than double from the same period a year earlier, according to central bank data.
Khan said he saw no reason to fear a sudden change of the tide in hot money. Almost a decade ago, Asian countries such as South Korea and Thailand suffered heavy economic blows when foreign investors suddenly started to pull out their money.
The magnitude of portfolio investments to Pakistan is still small compared with those to Asian countries just before the Asian economic crisis, Khan said. He also said Pakistan will issue sovereign offshore bonds this month and that the issue will be a 144A-type paper - a clause that makes the securities eligible for purchase and trade by institutional US investors.
Khan said the size and duration of the bonds will be determined after a roadshow expected later this month. The issue will be Pakistan's fourth foray into the international bond market since 2004, when it returned to the arena for the first time since economic sanctions were imposed on it for conducting nuclear tests in 1998.