Signs of economic recovery are emerging on the country's horizon. Bilateral and multilateral donors are giving positive signals to ease Pakistan's financial and the balance of payments situation. Global political scenario is also fast emerging in Pakistan's favour as a result of the change of administration in the United States and the disastrous failure of India's Mumbai blast blame-game. This led Japan, the most trusted US ally, to mobilise financial resources to help improve the on-going financial crisis in Pakistan. For the international community, Pakistan's financial meltdown is crucial to keep the country on the path of democracy and to combat global terrorism. In his foreign policy address to the Diet last week, Japanese Foreign Minister, Hirofumi Nakasone, reiterated Japan's pledge to step up assistance to Pakistan to fight terrorism and stabilise its economy. Japan is actively playing an important and active role in the Friends of Pakistan forum, providing assistance to Pakistan against War On Terror, development of FATA, and supporting Pakistan in obtaining loans from Asian Development Bank, IMF, and World Bank. During the current fiscal year, up to March 2009, Japan assistance has increased to US$500 and it will significantly increase during the up-coming fiscal year. Pakistan's Financial Adviser, Shuakat Tarin, undertook a two-day official visit to Japan on February 4-5 to appraise his Japanese counterpart, Finance Minister, Shoichi Nakagawa, and Japanese Prime Minister Taro Aso. Tareen unveiled a plan to Japanese leaders about the setting up a Special Economic Zone in Karachi, which would serve as a gateway to Central Asian and Middle Eastern markets for Japanese companies. Moreover, Japan is willing to support mega projects in Pakistan. Coal, gas, and energy pipelines from Iran and Central Asia into Pakistan, and India and China are of immense importance. Japanese technology and capital could play a crucial role in materialising these projects. Nevertheless, with this increased economic assistance, Pakistan-Japan relations have revived all-time high, better than the 1990s and the 1980s, to the level of the 1960s when Pakistan received massive Official Development Assistance (ODA) from Japan. However, at that time it was the country's massive industrialisation that pushed Japan to offer ODA to Pakistan even at the expense of other East Asian countries including South Korea and others. Therefore, a massive industrialisation programme, and to revive the sick industrial units, and spade-work on mega projects must be accelerated. Following the democratic set-up in Pakistan after the February 18 polls last year, Friends of Pakistan group was formed on September 26 last in New York. Friends of Pakistan include: United States, United Kingdom. Australia, Canada, China, France, Germany, Italy, Japan, Turkey, Saudi Arabia, United Arab Emirates, representatives of the European Union and the United Nations. The primary aim of the launching of the Friends of Pakistan was to ease the country's financial burden as foreign currency reserves were alarmingly reduced following oil price hike and rising inflation that also increased the country's import bill to an unprecedented level together with the illegal smuggling of foreign currency from Pakistan to several foreign destinations. Attended by the United States, Britain, Italy, Germany, France, Japan, China, Australia, Turkey, Canada, Saudi Arabia, and the UAE, the first meeting of the group was held at Abu Dhabi on November 17 last. The forum showed great commitment and solidarity with Pakistan to revive its economy. The Friends of Pakistan's presence in several of international financial and economic fora provides an edge to ease Pakistan's financial woes. As no concrete step was taken to immediately offer cash to bailout Pakistan, the Dubai gathering gave ample room to the critics of the government. Critics even lamented on China, Saudi Arabia, and UAE as no cash was put on the table by these countries. Many were disappointed. Even the homework for new projects, prepared by the Government of Pakistan, could not present factual position and invited criticism from the forum. In fact, the forum developed a systematic way in dealing with Pakistan's economic mess out. The IMF was told to offer US$7.6 billion loan package to Pakistan for the next 23 months. The situation is, however, fully reversed by now. The working group meeting of the Friends of Pakistan will be held in Dubai during current month. While the ministerial meeting of the Friends of Pakistan will be held in Tokyo next month (March). The efforts of the Friends of Pakistan need to be appreciated as this will usher in an era of new economic cooperation in Pakistan's history. Let's also hope that the anti-terrorism aid would not going to be wasted again. It is not only painful for the international community as the precious resources are being misused for other purposes; Pakistan also has to keep suffering from the economic fever. Austerity is not being observed. Time and again the government makes announcements without cutting unnecessary expenditures, particularly the non-development ones, to optimise the use of limited financial resources but all announcements seemingly went in vain. Eyebrows are being raised by many as the government has not found an elected finance minister to implement the people's aspirations. The country needs to fully implement the mandate given by the poor masses. Industry is suffering from power shortage along with huge units lying sick for years and years. An effective industrial policy, pro-poor governance, and the formation of an export-led economy are the only tools to put the economy on strong footing, a mission remained unaccomplished after the elected government of Zulfikar Ali Bhutto. In short, with the support of the Friends of Pakistan to ease financial pressure on Pakistan and to speed up reconstruction efforts in FATA, prospects for a brighter and stronger Pakistan would put the country on the path of prosperity and peace. The writer is a research fellow (East Asia) at the Islamabad Policy Research Institute (IPRI)