Pakistan's Taliban Fight Threatens Key Economic Zone

[Coventina]

Source: Wall Street Journal

Pakistan's widening fight against the Taliban is threatening key areas for the country's economy, potentially turning a long-running dispute into an economic and fiscal crisis.

While foreign investors have shied away from Pakistan for months due to political turmoil and security concerns, the economy has so far avoided recession in the global downturn and Karachi shares have gained this year. But with recent advances, Islamic militants can now harass Pakistan's economic heartland, potentially causing significant damage to government finances.

This could dry up the country's already meager tax revenues, sending Islamabad back to the International Monetary Fund and other donors for another bailout, some analysts say.

The Taliban have long been a factor in Pakistan's lawless tribal areas bordering Afghanistan, but this area is of little economic importance. More recent moves into the North West Frontier Province, accounting for 10% of the country's economy, are more serious.



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