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Nawaz Sharif, Pakistan’s prime minister, has been given a two-month reprieve by the country's supreme court, as judges ordered a further investigation into alleged corruption in a case which has threatened to topple him and his government.

A panel of five judges said on Thursday that Mr Sharif should remain in place while a further 60-day investigation is conducted into his family’s finances, following revelations made in the leaked Panama Papers. The decision was made on a 3-2 majority, as two judges recommended Mr Sharif’s complete removal.

Ikram Sehgal, a Pakistani political commentator, said: “The formation of a joint investigation team suggests there is a need to investigate a crime. In any other country of the world, the prime would have resigned and asked for a fresh mandate.

“I believe Nawaz Sharif will be significantly weakened and questions will continue over his future.”

Mr Sharif has in recent years presided over an improvement in the country’s security situation, following a largely successful army crackdown on terrorist groups, helping to fuel a nascent economic recovery. The World Bank this week predicted Pakistan’s economy would grow by more than 5 per cent this year.

But his government has operated under a cloud since last year, when his two sons and daughter were revealed to own offshore companies and assets not shown on his family’s wealth account.

The documents came to light as part of 11m leaked from Mossack Fonseca, a Panama-based law firm, which also contained details of many prominent business figures and politicians. Sigmundur David Gunnlaugsson was forced to step down as Icelandic prime minister after the papers showed he had once owned part of an offshore company that held stakes in three Icelandic banks which collapsed in 2008.

Imran Khan, the former cricketer turned opposition politician, called on Mr Sharif to step aside while the investigation continued. “How can someone who has become as controversial as Nawaz Sharif continue as prime minister?

Senior business leaders have expressed private concern that Mr Sharif’s removal might endanger Pakistan’s modest revival. One told the Financial Times before Thursday’s verdict: “While it would be good if the supreme court showed that the judiciary is independent, it would not be good for the country if he is removed.”

Mr Sharif’s party claimed victory following the verdict. Khawaja Mohammad Asif, the water and power minister, said: “[The] prime minister had said six months ago that a commission should be formed to investigate this matter. That’s exactly what the supreme court has now ordered. We have been vindicated.”

But others warned that Mr Sharif’s position remains in peril. The head of one Pakistani private bank said: “Though Nawaz Sharif has won a reprieve for now, its still early to say if his future is secure. There will be continuing uncertainty.”

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