ISLAMABAD, Jan 14: Economic Adviser to the Prime Minister Shaukat Aziz on Tuesday said a booming stock market, reduced debt payments and rising forex reserves were the foundations for real growth in years to come and not indicative of a “virtual” economic boom.

Pakistan weathered the storm of war in neighbouring Afghanistan in late 2001, before spending the first half of 2002 in a tense military stand-off with nuclear-armed rival India.

It still posted economic growth in 2001/2002 of 3.6 per cent, and has forecast a rise to 4.5-4.6 per cent this fiscal year and to 6 per cent in 2003/4.

Foreign exchange reserves have jumped to more than $9 billion while inflation and debt servicing are down.

“The growth we see is based on sound, solid foundations, not aberrations,” Shaukat Aziz told Reuters in an interview late on Monday.

Aziz, 53, is widely tipped to return to his post as finance minister, if he wins a seat in the Senate — upper house of parliament.

Adding to his sense of confidence in the economy has been the stock market’s meteoric rise in 2002, with the Karachi Stock Exchange index more than doubling to top world equities rankings.

But many Pakistani economists have dismissed the rising indicators as a false dawn, the result of debt concessions on the part of Western countries thankful for Pakistan’s support for the global war on terror.

Stocks soared due to the lack of alternative investments, they say, and with the index heavily weighted towards four or five big companies, a small amount of money exaggerated results.

But Aziz, a former executive vice president in charge of corporate planning at Citibank in New York, said the real economy is set to follow the market on an upswing.

“Now as the real sector picks up, you’ll see more job creation, more government spending, construction is picking up now,” said the tall, urbane Aziz, who has held executive positions with Citibank in Asia, Europe and the United States.

Aziz estimated that debt servicing in the current fiscal year would fall to 44 per cent of total revenues from 47 per cent the previous year and 64 per cent in 1998/99.

Foreign debts have dropped to around $36 billion from $38.5 billion in the last three years, and he estimated domestic debt at around 1,766 billion rupees ($30.45 billion).