Pakistan on Friday said resolution of the Kashmir issue was 'imperative' for peace and economic prosperity in the region and asked the world community to help in the process of its settlement by encouraging the two sides to demonstrate "sincerity".

"It was and still remains our earnest hope that an improved state of relations between Pakistan and India could provide a precious opportunity for our two countries to work for resolution of the difficult issues between us, in particular the unresolved Kashmir dispute," Premier Yousuf Raza Gilani [Images] said.

He said this 'outstanding issue must be resolved keeping in view the aspirations of the Kashmiri people'.

The world community could help in this process by "encouraging both the parties to stay the course and to demonstrate courage, determination and sincerity," Gilani said in an address to a seminar here on 'Democracy in Pakistan'.

Gilani also said Pakistan faced regional challenges "mainly on two counts: the conflict in Afghanistan and the unresolved Kashmir dispute".

The resolution of these issues is "imperative for peace and economic prosperity of the region and its people", he said.