posted September 20, 2008 12:13 PM            

The hotel is a popular spot for foreign visitors, journalists and tourists and is in the Pakistani capital's high-end district, full of banks, shopping malls and boutiques. The hotel itself is heavily guarded and security checks are in place both on roads into the city and before vehicles can enter close to the hotel. It is the latest attack on Pakistan's cities as the security situation in the border region with Afghanistan deteriorates, presenting the new president, Asif Ali Zardari with a massive challenge as he seeks to solidify Pakistan's democracy and right the ailing economy.

The blast came after Mr. Zardari addressed a joint session of parliament and the cabinet in Islamabad. He said the country is facing tough economic challenges, but the government will soon take a series of steps to address the issues.

"We will start a new beginning and effective measures will be taken soon to redress the economic woes," Mr. Zardari said, according to Dow Jones Newswires.

Pakistan's fiscal deficit bloated to around $10 billion in the last financial year that ended June 30, more than double a year earlier, on higher oil subsidies and an increase in defense spending. Inflation also has shot sharply higher while growth is slowing, prompting nervous investors to dump local stocks and in turn punish the Pakistani rupee, which is currently trading near all-time lows against the U.S. dollar.

The government has removed all subsidies on oil while it also plans to introduce steps to restore the confidence of domestic and foreign investors in the local financial markets, Mr. Zardari said, without elaborating. The federal government will also take steps to improve agricultural output and crop acreage to protect the interests of farmers, he said.

The Marriott hotel in Islamabad has been targeted before. In January 2007, a security guard blocked a suicide bomber who triggered a blast just outside the Marriott, killing the guard and wounding seven other people, according to the Associated Press.

Pakistan's military for in recent weeks has mounted a major offensive against Islamist militants in the border region. The U.S. in the past month also has stepped up missile attacks in that area and conducted one commando raid in an effort to stop militants crossing the border and attacking U.S. troops in Afghanistan.