ISLAMABAD, 6 May — Pakistan strongly hopes that larger aid and foreign direct investment flows will continue as international support for its economic programs and political goodwill lasts.

This support was endorsed at the just-concluded Paris session of the Pakistan Development Forum (PDF), formerly Aid to Pakistan Consortium. While there are wide-ranging opportunities for foreign investment, Pakistan’s telecom sector alone has the potential to attract $15 billion, officials of international financial institutions, also said at Paris. These opportunities for FDI include energy and the financial sector, besides others.

Among many government donors, the World Bank, as starters, has agreed to provide $1.0 billion International Development Association (IDA) funds, during fiscal 2003 that starts July 1.

Of this $500 million will help improve balance of payments, $300 million for banking sector reforms, while the remaining amount is expected to fund administrative and financial reforms as well as community development. More fresh assistance is to follow as announcements are likely to come from the respective capitals of the governments that participated in the annual Paris meeting.

But, trying to cash the international goodwill Gen. Pervez Musharraf has earned by joining Washington-led campaign against terrorism, Islamabad’s economic team led by its Finance Minister Shaukat Aziz, is trying to attract much more FDI than ever before.

The World Bank in its country report, "Pakistan Development Policy Review — A New Dawn," issued on the eve of Paris meeting, says Islamabad deserves worldwide recognition for "how much has been accomplished so quickly." It highlights Islamabad’s initiative in political decentralization and its fast track execution as the boldest step yet launched ... but, the challenge of moving forward from political decentralization to fiscal devolution remains to be faced."

"This reform is important as it has the potential to deliver better services in the fields of education, health and poverty alleviation," the report says.

But, its not honey and roses all the way. While endorsing Islamabad’s economic performance, World Bank and other donors have also highlighted many areas where considerable reform and government action is still required to make the economy and governance show tangible results. At the same time, Gen. Musharraf has, although has, "officially won" the April 30 referendum to continue as president for the next five years, considerable rhetoric and uncertainty has been generated by the event.

International reaction to referendum has been muted as all important Western donors from US to France and European Union have, once again, stressed the need to hold the free and transparent national elections in October and Pakistan’s return to full-scale democracy, as Musharraf has promised.

The Paris meeting has asked Islamabad to ensure that its national budget for fiscal 2003, to be unveiled in June, should "reinforce the political reforms of decentralization so far, and put real expenditure power and choice in the hands of locally elected officials."

Pakistani officials, too, briefed the Paris meeting, about the steps the government has taken for reforming governance and plans for human development. Aziz assured the conference "there is no turning back and no U-turns on donors advice to Pakistan to continue to deepen and quicken its reform efforts." Aziz, however, strived harder to attract FDI. Aziz said also, "since business confidence has been restored to some extent, multinational are operating and investing more money in Pakistan."

The plus point of the government’s past 30-month program, is the fact that the current account deficit has been reduced to 2 percent of GDP, compared to the average of 5 percent in 1990s.