KARACHI - PAKISTANI President Pervez Musharraf hit back at calls for his resignation, saying he was needed to help political parties avoid an economic meltdown and tackle a militant threat gripping the country.

'We cannot address the problems of terrorism and extremism and the economic crisis if there is no political stability,' Mr Musharraf told businessmen in Karachi on Friday in his first public address since his allies lost an election last February.

The key United States ally in the war on terrorism lost parliamentary support, but the Bush administration has voiced support for Mr Musharraf, who came to power as a general in a coup in 1999.

Mr Asif Ali Zardari, widower of assassinated two time prime minister Benazir Bhutto, led the Pakistan People's party (PPP) to victory in the polls.

The PPP formed a coalition with three other parties including the runner up led by Mr Nawaz Sharif, the prime minister Mr Musharraf overthrew.

Mr Sharif pulled his party out of the government in May, after Mr Zardari reneged on a commitment to swiftly reinstate Supreme Court judges who Mr Musharraf had dismissed.

The judges could revive a case challenging the legitimacy of Mr Musharraf's re-election by the previous parliament last October.

Mr Sharif has called for Mr Musharraf to be impeached for invoking emergency rule and suspending the constitution for six weeks last November or even put on trial for his role in the Kargil border conflict with India in 1999.

Mr Zardari has said the presidency would be occupied by a PPP nominee soon.

Mr Musharraf said the politicians should bury the past and work together with him for Pakistan's future, adding that he would be happy for the coalition to complete its five-year term.

'Reconciliation is the name of the game,' he said. 'I would have resigned yesterday, if that could have provided solutions to the problems of Pakistan.'

Aside from US support, Mr Musharraf also maintained he had the support of the army. 'It is not the army that will ditch me... that will be my last day ... that will never happen.' There has been intense speculation that Mr Musharraf could quit in weeks or months.

The political uncertainty has exacerbated a loss of confidence among investors worried that the government will be unable to focus on the economic problems, including inflation running over 20 per cent.

The rupee hit a new low on Thursday against the dollar, while authorities moved last week to halt a steep fall in the share market by limiting daily movements to one per cent down or 10 per cent up, and placing a ban on short selling. -- REUTERS

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