Prime Minister Benazir Bhutto has agreed in principle that state-owned financial institutions should invest more in the country's three stock exchanges. The announcement came after a 3 December meeting between Bhutto and the presidents of the three bourses during which they discussed methods of countering the recent slide in stocks.

Market sources say that the announcement does not constitute a long-term policy. Instead it refers to the possibility of funding extra investment by releasing around Rs 1,000 million ($29.2 million) of the proceeds of privatisations, they say. The money is currently held by the Privatisation Commission.

Bhutto has also agreed to the establishment of a committee headed by the chairman of the Corporate Law Authority to examine ways of stimulating the market. An official announcement concerning the details of all measures is imminent. It is not expected to contain measures which will create a long-term market recovery.