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COUNTRY BRIEFS


BILATERAL RELATIONS OVERVIEW

Australia and Pakistan enjoy long-standing friendly and growing relations underpinned by growing people-to-people links. Australia established diplomatic relations with Pakistan after partition and has had a resident mission in the country since 1948. Australia is committed to supporting Pakistan as a partner in its efforts to confront security threats, build economic prosperity and enhance development. Australia is an active foundation member of the Friends of Democratic Pakistan.

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POLITICAL OVERVIEW

Main political organisations

The main political organisations in Pakistan are: Pakistan People’s Party (PPP); Pakistan Muslim League (Nawaz) (PML-N); Pakistan Muslim League (Quaid) (PML-Q); Jamaat-i-Islami (JI) and Jamiat Ulema-e –Islam-Fazl (JUI-F) (a former PPP coalition partner); Muttahida Qaumi Movement (MQM); Awami National Party (ANP); Pakistan Tehrik-Insaf (PTI); Pakistan Muslim League (Functional) (PML-F); Pakhtoon Milli Awami Party; and Jiye Sindh Qaumi Mahaz.

National government

The PPP and the PML-N — the two parties which won the most seats in the February 2008 National Assembly election — led a coalition Government until late August 2008, when the PML-N left the coalition. The PPP is currently in coalition with the PML-Q, the MQM, ANP, the Federally Administered Tribal Areas (FATA) parliamentary group, the PML-F, and the Balochistan National Party — Awami (BNP-A).

A presidential election was held on 6 September 2008, which resulted in the election of Asif Ali Zardari as President. The next Presidential and Parliamentary elections are due to take place in 2013, when the government completes its five year term. Yusuf Raza Gilani, a member of the PPP, is the Prime Minister and Head of Government. The Prime Minister was elected by the National Assembly in March 2008. The Prime Minister heads the Cabinet and the President chairs the National Security Council, which comprises military chiefs and cabinet members.

National legislature

Pakistan has a federal system of government with a bicameral legislature: the National Assembly and the Senate.

The National Assembly (the lower house) has 342 seats. The majority of lower house seats are elected on a first-past-the-post basis, with 60 seats reserved for women and 10 for non-Muslim minorities. The reserved seats are allocated on the basis of proportional representation to parties that win more than 5 per cent of the directly elected seats.

The current Senate (the upper house) consists of 100 senators. In the Senate, 23 senators are elected by each of the four provincial assemblies, eight are FATA representatives and 4 are Federal Capital Territory (Islamabad) representatives from the lower house. Under the 18th Constitutional Amendment (passed in February 2010) four seats are allocated to non-Muslim minorities. An election for one-half (i.e. 50 senators) of the seats in the Senate was held in March 2009 and the next election (for the other half of the chamber) is due in March 2012.

Provincial and other sub-national governments

The Islamic Republic of Pakistan includes four provinces — Sindh (capital, Karachi), Punjab (capital, Lahore), Khyber Pakhtunkhwa (formerly the North-West Frontier Province) (capital, Peshawar) and Balochistan (capital, Quetta).

All four provinces have their own elected provincial assemblies and governments. A Chief Minister heads each provincial government. Each province has a Governor, who is appointed by the President of Pakistan. Elections for provincial assemblies were held in February 2008 at the time of the National Assembly election.

Islamabad is a special 'Federal Capital Territory'. In addition, the Federal Government administers seven tribal agencies (Bajaur, Khyber, Mohmand, Kurram, Orakzai, South and North Waziristan) and six frontier regions. Collectively these 13 administrative units are known as the Federally Administered Tribal Areas (FATA).

Pakistan also administers approximately one-third of the area of the former princely states of Jammu and Kashmir and Gilgit-Baltistan — also known as the 'Northern Areas' of Pakistan — which have a quasi-provincial status and are not represented in the national parliament (legislature). They have their own elected parliaments and governments.

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ECONOMIC OVERVIEW

Pakistan's economy

Pakistan's economy comprises the services sector (50 per cent), industry/manufacturing (25 per cent) and agriculture (25 per cent). Agriculture, a sector which has performed strongly in 2011, is a mainstay of the economy, accounting for up to 24 per cent of total Gross Domestic Product (GDP) and 57 per cent of export earnings, with 44 per cent of the country's population depending directly or indirectly on agriculture for their livelihood. Manufacturing, which contributes approximately a quarter of Pakistan's GDP, is concentrated around the Karachi-Hyderabad region and Lahore. Pakistan produces two-thirds of its own energy needs, principally in the form of gas from the east of the country, and hydro-electricity from dams at Tarbela and Mangla. Energy shortages, however, remain a constraint on expanding manufacturing in the country. Pakistan is a net importer of oil.

During the period 2004-2009, Pakistan experienced strong economic expansion due to growth in the manufacturing and services sectors, with GDP growth approximately seven per cent in 2004 and 2005. The onset of the global financial crisis caused Pakistan's GDP growth to fall sharply and in late 2008 Pakistani authorities embarked on a stabilisation program, supported by an International Monetary Fund (IMF) US$7.6 billion loan under a 23 month Stand-By Arrangement. In August 2009, the IMF extended the program to 25 months and raised its support to US$11.3 billion to help address increased risks and financing needs. Following this support, Pakistan's economy made some progress toward stabilisation and economic reform. Pakistani authorities have taken steps on structural reforms to strengthen bank supervision, bolster the social safety net, reform petroleum pricing and taxation and to liberalise the foreign exchange market.

The IMF has noted that Pakistan's economy faces important challenges, stating in May 2011 that economic growth had been negatively affected by the floods and the high price of oil, along with persistently high inflation and budgetary problems which were undermining macroeconomic stability. The IMF welcomed tax measures aimed at increasing revenue, noting that reducing the budget deficit will require higher revenue through tax reform to broaden the tax base, including steps to implement reforms in the general sales tax. Reform of Pakistan's electricity sector remains a major challenge — Pakistan faces ongoing energy shortages and blackouts in many parts of the country. Noting that measures to reduce spending on general subsidies in the energy sector have begun to be implemented, the IMF stated that continued efforts are needed to reduce the budget deficit to take the pressure off monetary policy and create space for more credit in the private sector. The State Bank of Pakistan has forecast GDP growth to be between two and three per cent for the 2010-11 financial year.

Trade

In terms of trade, Pakistan is a net exporter of agricultural products, with linen, rice and cotton yarn dominating export trade, and petroleum and vegetable oils dominating imports.

Pakistan's merchandise exports stood at US$21.4 billion and imports at US$37.5 billion in 2010, resulting in a trade deficit of roughly US$16 billion. Pakistan's major exports in 2010 were linen (12.3 per cent of total); rice (10.6 per cent); and cotton yarn (7.6 per cent). Pakistan's major imports in 2010 were non-crude petroleum oils (19.3 per cent of total); crude petroleum oils (9.4 per cent); and palm oil (4.4 per cent). Pakistan's leading export markets in 2010 were the United States (17 per cent of total), United Arab Emirates (8.6 per cent), Afghanistan (8 per cent), China (6.7 per cent) and the United Kingdom (5.2 per cent).

Development

Pakistan has made some progress towards meeting the United Nations Millennium Development Goals but not others, notably those in relation to extreme hunger and poverty, primary education, gender equality, and maternal and child health. The United Nations Development Programme (UNDP) estimates that one third of the population live on less than US$1 a day and almost one-quarter of the population is malnourished. The maternal mortality rate is high, with around 320 out of 100,000 mothers dying during child birth and only 39 per cent of births attended by skilled medical personnel. Child health and nutrition are a particular concern, with two out of every five children malnourished and one in 10 children dying before the age of five. According to the UNDP, nearly half of Pakistan’s adult population is illiterate; including two-thirds of all women (this average masks significant provincial variations for example, only three per cent of women in the FATA are literate). Only two thirds of primary school-aged children are enrolled in school, of which almost a third will drop out before reaching secondary school. Female literacy is, on average, 28 per cent lower than men’s and the likelihood of women completing secondary education is half that for men. Pakistan ranked 125 out of 169 countries in the 2010 United Nations Human Development index, a ranking that may worsen in 2011 due to the devastating impact of the 2010 floods on development progress across the country. See the AusAID website (http://www.ausaid.gov.au/) for more information.

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BILATERAL RELATIONSHIP

Political relations

The Australian Government has intensified its engagement with Pakistan in the areas of security and stability (including defence and law enforcement training), advocating for economic reform and development, building capacity and improving democratic governance.

Australia and Pakistan have a long-standing friendship built on a common heritage and shared interests. Both are members of the Commonwealth of Nations and are federations with bicameral legislatures.

Australia's Minister for Foreign Affairs, the Hon Kevin Rudd MP, visited Pakistan in September 2010 — the Minister's first overseas visit as Foreign Minister. Mr Rudd visited a temporary Australian medical facility at Kot Addu, near Multan in Punjab Province. The medical facility was established to deliver health services to the local population as part of Australia's flood relief efforts and treated over 11,000 people during its operation.

Australia's aid program to Pakistan has increased annually since 2008. In 2011-12 Australia's total Overseas Development Assistance (ODA) for Pakistan is estimated at $92.8 million, including an estimated $79.0 million for the bilateral program. Total ODA to Pakistan in 2010-11 is estimated at $119.3 million, and includes increased humanitarian and early recovery funding provided in response to the July 2010 floods. Australia's aid program to Pakistan will be guided by the Australia-Pakistan Development Partnership, expected to be formalised during 2011. The partnership will set out the principles, mutual commitments and priorities for development cooperation as agreed between the Governments of Australia and Pakistan, and will form the basis of ongoing development engagement. See the AusAID website (http://www.ausaid.gov.au/) for further information.

People-to-people links

People-to-people links between Australia and Pakistan are expanding. There is a growing Pakistani community in Australia of approximately 17,000 Pakistan-born people and in 2010 there were approximately 5000 Pakistani students studying in Australia. Since 1991, AusAID has provided 433 Australian Development Scholarships (ADS) to Pakistani nationals, of which around 39 per cent were to women. Fifty-one Pakistani nationals will begin their ADS studies in Australia during 2011, including five awardees of the Australia Pakistan Agricultural Scholarships (then Prime Minister Rudd announced an additional 100 Australia Pakistan Agricultural Scholarships in September 2009). Australia and Pakistan enjoy growing links through sport, including hockey and cricket.

Economic and trade relations

Australia-Pakistan total two-way trade in 2010 was $703 million, compared with $578 million in 2007 and $600 million in 2008. Major Australian exports to Pakistan include seeds, oleaginous fruit, vegetables and coal. An Australia-Pakistan bilateral trade agreement has been in force since 12 July 1990. The agreement commits both parties to "facilitate, strengthen and diversify" trade. Australia and Pakistan have a Joint Trade Committee mechanism to discuss opportunities to expand bilateral trade and investment.

Austrade has three locally engaged Business Development Managers in Pakistan, one in each of Islamabad, Lahore and Karachi. Country management for Pakistan is the responsibility of Austrade's Regional Senior Trade and Investment Commissioner, who is based in New Delhi. For further information, see Austrade's website (http://www.austrade.gov.au/) .

Australia and Pakistan are actively exploring avenues to expand trade and investment, particularly through agribusiness and agricultural science linkages. There are prospects for growth in trade and investment, particularly in:

-- education (tertiary, vocational and corporate training)

-- agribusiness (dairy, crop production, quality issues, storage and handling)

-- airports (design and construction)

-- mining (oil and gas exploration and development)

-- processed foods, and

-- IT and communications products and services.

Future sectors that may provide opportunities for Australian trade and investment include:

-- clean energy technologies (including clean coal, wind and renewables)

-- medical technologies, and

-- infrastructure investment.

With extensive natural resources, including oil and natural gas reserves, the fourth-largest coal reserves in the world and prospects for hydropower, Pakistan offers potential opportunities for Australia's mining expertise.

Australia's membership of the Friends of Democratic Pakistan

Through Australia's foundation membership of the Friends of Democratic Pakistan (FODP) and participation in the International Contact Group on Afghanistan and Pakistan, Australia is working with Pakistan, and the international community, to ensure the best possible coordinated effort is made to support Pakistan.

The FODP is a diverse group that provides high-level political support and strategic dialogue with Pakistan to support its efforts to address its security, economic and development challenges. The FODP first met on the margins of the United Nations General Assembly in September 2008 and has since held annual ministerial-level meetings. The foundation members were: Australia, Pakistan, United States, United Kingdom, Canada, United Arab Emirates, Saudi Arabia, France, Germany, Italy, Turkey, China, Japan, European Union and the United Nations. Members appointed since the inaugural meeting include: Sweden, Norway, Denmark, Spain, Netherlands, Republic of Korea, Iran, World Bank, Asian Development Bank and Islamic Development Bank. Egypt joined the FODP at the October 2010 Ministerial Meeting.

Pakistan Development Forum

The Pakistan Development Forum (PDF) is a high-level multilateral forum for dialogue between the Government of Pakistan, civil society and international donor partners on key development priorities. The PDF, which had not met since October 2007, was reconvened by the Government of Pakistan in November 2010 in response to the ongoing humanitarian crisis that followed the devastating 2010 floods. The meeting provided an important opportunity for donors to reaffirm their support for the Government of Pakistan, discuss ways to improve aid coordination, and engage with the Government of Pakistan on policies and strategies to address the country’s many development challenges, including economic reform. The PDF is due to meet again in 2011.

Australia's Special Envoy for Afghanistan and Pakistan

The appointment of Australia's Special Envoy for Afghanistan and Pakistan, Mr Ric Smith AO PSM, by the Prime Minister in March 2009, is a demonstration of the Government's commitment to coordinated and effective regional and international diplomacy.

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Last Updated: June 2011

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