Outlook for 2011-15

• Inter-party tensions have risen. Much political conflict in the forecast period will remain highly personalised, and prospects for a substantial improvement in political effectiveness are therefore remote.
• Although the spectre of a no-confidence motion against the government has been averted for the time being, another political crisis that could lead to the fall of the administration and the holding of a snap poll remains a possibility.
• The US will remain Pakistan's most important donor and strategic partner, but the bilateral relationship is complex and will remain fraught with tension.
• Pakistan will remain heavily reliant on concessional loans and emergency aid from multilateral institutions and bilateral donors. The catastrophic flooding of August-September 2010 has only heightened this dependency.
• Further disbursements from the emergency stand-by agreement with the IMF may be in jeopardy because of the Pakistani government's repeated failure to implement structural economic reforms mandated by the Fund.
• Real GDP growth in 2010/11 (July-June) will be constrained by power shortages and the effects of the floods. Growth will accelerate to an average annual rate of 3.9% in 2011/12-2014/15, from an estimated 3% in 2010/11.

Monthly review

• On March 16th a Pakistani court acquitted a US citizen, Raymond Davis, on charges of murder after relatives of the men he was accused of killing testified that they had accepted money as compensation.
• In early March Pakistan tested a nuclear-capable surface-to-surface missile, the Hataf-2 rocket, which it has co-developed with China.
• Around 50 people were killed in targeted attacks in Pakistan's largest city, Karachi, during a two-week period in March. Large parts of the city were partially shut down because of the violence.
• In March the State Bank of Pakistan (the central bank) announced that the benchmark interest rate, the discount rate, would remain unchanged, at 14%.
• An IMF mission visited Pakistan during the first ten days of March to hold discussions on the country's macroeconomic situation. However, the Fund gave no indication of whether scheduled disbursements would go ahead.
• Consumer price inflation decelerated again in February, to 12.9% year on year, from 14.2% in January and 15.5% in December 2010.
• Inflows of remittances from Pakistanis working overseas surged in February, rising by 43.5% on a yearly basis and 2.3% month on month, to US$845.3m.