Pakistanis jubilant over Musharraf's resignation

MULTAN, Pakistan (Reuters) - Pakistanis danced in the streets on Monday after beleaguered President Pervez Musharraf announced his resignation, with many ordinary people hoping his departure would bring improvement to their lives.

After ruling Pakistan single-handedly for nearly nine years, the former army chief and close ally of the United States announced his resignation in a televised address in the face of an impending impeachment by the ruling coalition government.

Lawyers, who have spearheaded an anti-Musharraf campaign since he tried to sack the chief justice last year, stormed out of courts in the southeastern city of Multan on hearing of Musharraf's resignation, shouting "Down with the American stooge".

"It's just like I'm celebrating my wedding," said lawyer Malik Naveed, dancing among a crowd of about 400 colleagues.

Then army chief Musharraf was welcomed when he deposed an unpopular prime minister in a 1999 coup, ending a decade of fractious civilian rule.

But his popularity began to evaporate last year when he tried to dismiss the chief justice, and later imposed a six-week stint of emergency rule, cracking down on the media and detaining thousands of political activists.

Jaffar Shah, a retired soldier in the northwestern city of Peshawar, said: "The root cause of all problems has gone".

"I wish I could fire shots to show my joy but unfortunately I can't do that."

People in Karachi, the country's commercial capital, handed out sweets and danced in celebration.

"Thank God he's resigned. The country will do much better now. It's a victory for the people," said Mohammad Ilyas, 30.

ECONOMIC WOES

Critics have complained the wrangling over Musharraf distracted the new government's attention from worsening security and a deteriorating economy.

Inflation is at its highest in 30 years and fiscal and current account deficits are widening. The rupee has lost about a quarter of its value this year while stocks have plummeted about 50 percent from a record high set on April 21.

Some Pakistanis harbored what would appear to be unrealistic expectations for the post-Musharraf outlook: "Inflation is surely going to go down now," said Rifaqat Shah, 65, a businessman in Karachi. But others were less optimistic about the resignation of a leader who promoted an investor-friendly environment and oversaw good growth and surging stocks until this year.

"The country was doing better economically but now the politicians won't be able to preserve the economy and things will get worse," said another Karachi resident, Mariam Bibi.

Despite Musharraf's unpopularity, many Pakistanis are suspicious of the civilian politicians -- a number of whom have returned to power -- who were dogged by accusations of corruption and mismanagement when they ruled in the 1990s.

Some said they feared that with Musharraf gone, the coalition would be beset by infighting between parties that have traditionally been rivals.

"I'm not very hopeful. These politicians will again indulge in political bickering ... I don't think they will bring down prices," said Mohammad Faisal, a civil servant in Multan.

(Additional reporting by Aftab Borka, Imtiaz Shah and Faris Ali)

(Writing by Zeeshan Haider; Editing by Robert Birsel)