Pakistan's central bank has called on the country's civilian government to stick to the former military dictatorship's economic policies and not give in to populist demands.

The existing policies are backed by substantial US aid.

"The induction of the newly elected government has generated expectations in some quarters that fiscal discipline... and good governance policies pursued during the last three years will gradually give way to more populist policies," the State Bank of Pakistan said in a quarterly report.

We have had the best performing stock market in the world this year Moin Fudda, Karachi Stock Exchange

"This, if it happens, will be most unfortunate," it said.

Prime Minister Mir Zafarullah Khan Jamali, of the pro-military Pakistan Muslim League Quaid-e-Azam and a staunch supporter of coup leader President Pervez Musharraf, is expected to win a parliamentary vote of confidence on Monday.

Pakistan has witnessed an incredible economic boom since it declared its support for the US war on terror following the September 11 attacks in 2001.

US favours

Pakistan, which backed the US-led war against neighbouring Afghanistan, has been handsomely rewarded by Washington.

Its coffers have been filled with a $1.37bn (�854m) loan from the International Monetary Fund and another $700m from the World Bank. The US is the biggest shareholder in both organisations.

Aid was suspended in 1998 after Pakistan tested nuclear weapons.

The US and Europe also rescheduled about $15.5bn in debts

Foreign exchange reserves have tripled since September 2001 to $9.1bn due to a US crackdown on illegal money transfers that has resulted in large remittances by Pakistani expats.

The central bank, in its report, predicted economic growth of 4.5% in the financial year ending June 2003.

Market boom

The cash influx has helped Pakistan's stock market surge more than100% to an all-time high of 2661.4 points.

"We have had the best performing stock market in the world this year," said Karachi Stock Exchange (KSE) managing director Moin Fudda.

He attributed the result to "the strong level of investor confidence, which stems from solid economic fundamentals and stellar corporate performances".

The KSE is one of the Asia's smallest markets with a capitalisation of $9.6bn.

"The KSE-100 has increased by 110% this calendar year, and empirical analysis suggests the factors which made this happen are linked to the favours Pakistan received after the September 11 terrorist attacks," said Mohammad Sohail, chief of research analysis at InvestCap Securities.