Pakistan to increase defence spending

Pakistan has announced it is to increase defence spending by 17% in the coming year, with analysts saying much of it will be used to combat militants.

In his budget speech to parliament, Finance Minister Abdul Hafeez Shaikh said security forces should know they had the support of MPs.

Defence spending will rise to more than $5bn a year from next month.

Pakistani forces have carried out major offensives in the north-west over the past year.

However, there has also been a wave of deadly attacks by Islamic militants throughout the country.

"I think security is our topmost issue," said Mr Shaikh.

"We are facing a situation in which our armed forces, paramilitary forces and security forces are laying down their lives. They are bearing pain for the country and the people, I salute them. They should know from this house that we all stand by them."

In the past three years more than 3,400 people have been killed across Pakistan in bomb blasts and suicide attacks blamed on Taliban militants.

Last week more than 90 people were killed in co-ordinated attacks on two mosques of the minority Ahmadi Islamic sect in Lahore.

Pakistan, a vital ally for the US, has been heavily burdened by the cost of fighting Taliban insurgents along its Afghan border.

Mr Shaikh said government policies had reined in inflation - from 25% down to 13% - and brought economic stability.

"We are seeing the beginning of recovery," he said.

In 2008 Pakistan secured a $10bn loan package from the International Monetary Fund to keep its economy on track.

Analysts say the IMF is now putting pressure on Pakistan's financial institutions to make further reforms.