Pakistani coalition free to focus on problems
Leaders of Pakistan's coalition government on Tuesday set about seeking a replacement for President Pervez Musharraf and tackling pressing economic and security problems.
Pakistan coalition talks may threaten MusharrafMusharraf, former army chief and key ally of the United States in its campaign against terrorism, resigned on Monday to avoid impeachment nearly nine years after taking power in a coup.
Speculation he would resign had mounted since the fractious coalition government, led by the party of assassinated former prime minister Benazir Bhutto, said this month it planned to impeach him on charges of violating the constitution.
Prolonged wrangling over Musharraf's position hurt financial markets in the nuclear-armed country of 165 million people, and raised concern in Washington and elsewhere it distracted from efforts to tackle militants, especially in areas bordering Afghanistan.
Musharraf's resignation lifted Pakistan shares and the rupee on Monday and again on Tuesday.
Stocks jumped more than 3 percent in initial trade as investors cheered the easing of political turbulence while the rupee strengthened more than 2 percent against the dollar.
Investors said Musharraf's resignation removed a hurdle in politics, but markets were now waiting to see if the government could rule effectively.
"The market is now focusing on how well the coalition government can resolve the remaining issues," said Mohammed Sohail, a director of research at JS Global Capital. "Now is a testing time for the coalition parties."
Investors will be looking for concrete steps to restore confidence shattered by the political turmoil, analysts said.
These include shrinking the trade deficit by banning imports of non-essential items such as luxury consumer goods, and cutting government spending by abolishing all fuel subsidies, one said.
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