ISLAMABAD " Pakistan has informed the donor community that the country has suffered huge losses worth Rs 2080 billion during the last five years on account of its participation in the so-called war on terror. The Poverty Reduction Strategy Paper-II, prepared by the Government as a basis to seek funding from donor countries and agencies for different projects, says that these include direct losses of Rs 350 billion and indirect losses of Rs 1650 billion. The paper points out that the war on terror and severely dented Pakistan's efforts for development and the anti-terror campaign, which followed the 9/11 events in the United States in 2001, have over-strained Pakistan's budget as allocations for law enforcement agencies had to be increased significantly which meant erosion of resources for development all over the country particularly in FATA and NWFP in addition to human sufferings and resettlement costs. Several development projects started earlier in the affected areas are afflicted with delays which would ultimately result in large cost overruns. Since the start of the anti-terrorism campaign, an overall sense of uncertainty has contributed to capital flight as well as slowed down the domestic economic activity making foreign investors jittery. It is apprehended that the FDI which witnessed a steep rise over the past several years, may be adversely affected by the ongoing anti-terrorism campaign in FATA and other areas of the NWFP in addition to an excessive increase in the country's credit risk, which has made borrowing from the market extremely expensive. Pakistan's participation in the anti-terrorism campaign has led to massive unemployment in the affected regions. Frequent bombings, worsening law and order situation and displacement of the local population have taken a toll on the socio-economic fabric of the country. The estimated cost of the war on terror to Pakistan was around Rs 484 billion during financial year 2007-8 and it is projected to increase to Rs 678 billion during the current financial year. Meanwhile, the Poverty Reduction Strategy Paper-II envisages an investment of Rs 1850 billion in nine sectors of the economy to accelerate the pace of socio-economic development in different parts of the country. These are Macroeconomic Stability and Real Sector Growth, Protecting the Poor and the Vulnerable, Increasing Productivity and Value Addition in Agriculture, Integrated Energy Development Programme, Making Industry Internationally Competitive, Removing Infrastructure Bottlenecks through Public Private Partnerships (PPPs), Capital and Finance for Development, and Governance for a Just and Fair System.