Pakistan's president Pervez Musharraf is touring neighbouring countries. with the aim of strengthening economic ties around the region.

There is a growing expectation that Pakistan will sign a free-trade pact with Sri Lanka on Wednesday, with the Pakistani foreign ministry confirming the likelihood of such an agreement.

Trade between the two countries has been thin, and was estimated at less than $100m in 2000.

Sri Lanka is hoping to secure a growing outlet for its tea and clothing exports.

It entered into a free-trade pact with India two years ago, but has so far failed significantly to boost its exports.

Colombo concessions

Mr Musharraf will arrive in Colombo from a three-day trip to Bangladesh where he has also worked towards increasing bilateral trade.

Pakistan granted Bangladesh duty-free access to a number of goods including unlimited jute and 10,000 tons of tea.

Bangladesh exports to Pakistan increased by more than one-fifth in the year ending in June 2001.

All three countries form part of a seven-nation association for regional trade cooperation which also includes India, Bhutan, Nepal and the Maldives.

But frustration with perceived poor benefits from this organisation has persuaded countries to boost bilateral ties, BBC correspondent Alastair Lawson says.