Amid talk by the finance minister that the country may end up declaring a partial moratorium on its international debt commitments, many businessmen and economists are panicking over what the next few months hold for the country. Pakistan has to pay back $ 800-million debt in the next month. If this payment is made, Pakistan will have no money to pay for imports.

The mood on the street does not reflect this grim reality. ``We are ready to make the sacrifices,'' says Muhammad Riaz, a flower seller in Karachi's posh Clifton area. Riaz, and many Pakistanis like him, however, are unaware of the extent of sacrifices they would have to make if Pakistangoes down under.

Funds are drying up and people are slowly feeling the pinch as the prices of essential commodities are rising. Many shops see their stocks depleting as importers are reluctant to bring in foreign brands and the local brands are fast selling out. Staples like wheat, rice and cooking oil are still available but shopkeepers say that their prices are about to take a big jump. Many people with the means to do so have quietly started stocking up on edibles.

While the traffic continues to roll on busy streets in urban Pakistan, few people are aware that the country is staring at a financial crisis in the face. But the situation is not lost on the Karachi stock market, the country's biggest bourse. ``There is a lot of talk of a default in the market,'' says Mudassir Malik, who heads research at BMA Capital, a local brokerage house.

Malik and many other analysts like him say that the way things are going, a default seems a distinct possibility. That explains why the Karachi Stock Exchange hasbeen registering record lows in its index in the past month.

A default would mean super-inflation and a jump in the value of the dollar against the rupee. It would also mean a cut in imports of various kinds to a trickle, and rises in the price of petrol, gas, power and essential commodities.

Till now, foreign banks have rolled over about $ 314 million lent to the government in swap funds due at the end of June. Another $ 100 million was received from the Islamic Development Bank. And some $ 200 million were roped in from exporters. These measures allowed Pakistan's foreign exchange reserves to stand at $ 913 million on June 30, 1998. Since then, the reserves have started to deplete again.

Pakistan may be on the verge of default but many people are acting as if it has already defaulted, says one analyst. The biggest problem facing the Nawaz Sharif government is that it is suffering from a crisis of confidence. ``There is a serious lack of confidence in government policies,'' comments Nasir Shah Bokhariof brokerage Khadim Ali Shah Bokhari (KASB), a financial house.

For one, the revolutionary ``national agenda'', presented by the Prime Minister on June 11, seems to have been forgotten within days of its unveiling on national television. The government has side-stepped its commitment to nab tax evaders and recover defaulted loans on a ``war footing''.

One swoop against a factory belonging to a close relation of the interior minister brought to a halt all the tall claims of sparing no one. The recovery process has once again become partial and politically motivated.

Contrary to his commitment to cut expenditure on government functioning by 50 per cent, the government actually ended up cutting 15 per cent in the budget. The tough decisions and the cuts that were expected after the national agenda for self-reliance are still awaited.

More attention is on rhetoric than on reality. Vacating the Prime Minister's secretariat has been an expensive proposal. Millions have been spent refurbishing offices inthe capital to house the bloated staff of the PM's Secretariat. There still has been no talk of cutting down the size of the government.

For his part, the Prime Minister isn't acting like the head of a country that is about to declare bankruptcy. He has announced another scheme of loans for unemployed youth, unmindful of the bad debts that the nationalised banks accrued through his other failed schemes.

Sharif under pressure to sign CTBT

ISLAMABAD: Pakistan's deteriorating economic condition has placed the Nawaz Sharif government under increasing pressure from within to sign the Comprehensive Test Ban Treaty (CTBT) irrespective of whether India signs the treaty or not.

Economic experts in Pakistan have urged their country's political establishment to sign the treaty before the International Monetary Fund (IMF) and the G-8 countries decide to impose sanctions against Islamabad for conducting the nuclear tests.

According to these experts, if the western countries impose sanctions on Pakistan,the country will be left at their mercy in view of a massive deterioration of the economy. The nose-diving crash of the stock exchange, which caused a loss of billions of Pakistani rupees to the shareholders, has thoroughly shaken the country's business community. Never before in the history of the country has the stock exchange crashed to such an extent, they say.