Pakistan's Cost of War on Terror reaches new heights

Pakistan’s estimated cost of war on terror has edged up to Rs678 billion in 2008-09 up 40 per cent from Rs484 billion spent over last year immensely impacting the socio-economic costs of the country.
As a result of being a partner in the international counter terrorism campaign, Pakistan is currently facing major challenges including growing fiscal and current account deficits; rising inflation; growth deterioration; and depleting foreign exchange reserves, revealed the draft Poverty Reduction Strategy Paper (PRSP) – II of the finance ministry.
The estimated costs include both direct (actually spent) and indirect-- on account of loss of exports, foreign investment, privatization, industrial output, tax collection, etc being a frontline state in the war on terror.
Statistics released by finance ministry showed that the expected direct cost due to war on terror would reach Rs114.03 billion in the year 2008-09 from Rs108.527 billion last year. While the indirect cost would edge up to Rs563.760 during the year under review against Rs484.367 billion last year.
According to the report, the anti-terrorist campaign, which began as a result of the unfortunate 9/11 event in the United States in 2001, over-strained Pakistan’s budget as allocation for law enforcement agencies had to be increased significantly, which meant erosion of resources for development projects all over Pakistan, particularly in FATA and nearby NWFP areas in addition to human sufferings and resettlement costs.
Several development projects, started earlier in the affected areas are afflicted with delays, which may ultimately result in large cost over-runs. Since the start of the anti-terrorism campaign, an overall sense of uncertainty has prevailed in the country, which has contributed to capital flight, as well as, slowed down domestic economic activity making foreign investors jittery.
It is apprehended that Foreign Direct Investment, which witnessed a steep rise over the past several years may be adversely affected by the on-going anti-terrorism campaign in FATA and other areas of NWFP.
Pakistan’s participation in the international campaign has led to an excessive increase in the country’s credit risk, which has in turn made borrowing from the market extremely expensive. Pakistan’s sovereign bonds have under-performed due to increased law and order concerns amongst other reasons including domestic political and economic instability. Besides this, the report said Pakistan’s participation in the anti-terrorism campaign has also led to massive unemployment in the affected regions. Frequent bombings, worsening law and order situation and displacement of the local population have taken a toll on the socio-economic fabric of the country.