Economic Indicators of Business: International Monetary Fund

Economic Indicators of
Business
International Monetary Fund
Submitted to Sir Arslan Wasti

By
Khalid Rehman (BM25379)
Economic Indicators of Business
Table of Contents
Economy of Pakistan...................................................................................................................................3
Economic History.........................................................................................................................................3
The Economy Today....................................................................................................................................5
Factors Affecting Economy..........................................................................................................................6
Manufacturing.........................................................................................................................................7
Finance....................................................................................................................................................7
Stock market............................................................................................................................................8
Tourism....................................................................................................................................................8
Revenue...................................................................................................................................................8
Sectors of Pakistan Economy.......................................................................................................................8
Agriculture...............................................................................................................................................8
Industry...................................................................................................................................................8
Automobile industry................................................................................................................................8
CNG industry...........................................................................................................................................9
Cement industry......................................................................................................................................9
IT industry................................................................................................................................................9
Textiles....................................................................................................................................................9
Services..................................................................................................................................................10
Communication.....................................................................................................................................10
Electricity...............................................................................................................................................10
Installed capacity...............................................................................................................................10
Exports...................................................................................................................................................11
Imports..................................................................................................................................................11
International Monetary Fund....................................................................................................................11
What Does International Monetary Fund - IMF Mean?.........................................................................11
History of IMF............................................................................................................................................12
IMF Assistance to Pakistan........................................................................................................................12
1
1. The Agreement Of 1980....................................................................................................................13

2. The Agreement Of 1988....................................................................................................................13
3. The Agreement Of 1994....................................................................................................................14
4. The Agreement Of 1997....................................................................................................................15
The Year 2003-04...................................................................................................................................15
The Year 2008........................................................................................................................................15
The Year 2009........................................................................................................................................16
Effects of IMF Programs............................................................................................................................16
World Bank Assistance to Pakistan............................................................................................................17
Suggestion.................................................................................................................................................19
2
First of all we should understand Pakistan’s economy and on what factors it depends. In
that we can easily understand the role of IMF and World Bank on our economy.
Economy of Pakistan
The economy of Pakistan is the 27th largest economy in the world in terms

of purchasing power, and the 48th largest in absolute dollar terms. Pakistan is the
second largest economy in South Asia. Pakistan's economy mainly encompasses,
 Textiles
 Chemicals
 Food processing
 Agriculture
and other industries.
Economic History
At the time of independence in 1947, Pakistan was a very poor country and its
economy majorly depends on agriculture. Since independence, Pakistan's average
economic growth rate has been higher than the average growth rate of the world
economy during the period. Average annual was 6.8% in the 1960s, 4.8% in the 1970s,
and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with
significantly lower growth in the second half of that decade. Industrial-sector growth,
including manufacturing, was also above average. During the 1960s, Pakistan was seen
as a model of economic development around the world, and there was much praise for
its economic progression.
The table which gives every five years progress of GDP, US Dollar Exchange Rate,
Inflation Index, and Per Capita Income is given on the next page.
3
Inflation Index Per Capita Income

Year Gross Domestic Product US Dollar Exchange
(2000=100) (as % of USA)
196
20,058 4.76 Pakistani Rupees 3.37
0
196
5
197
0
197
5
197
283,460 9.97 Pakistani Rupees 21 2.83
8
198
569,114 16.28 Pakistani Rupees 30 2.07
5
199
1,029,093 21.41 Pakistani Rupees 41 1.92
0
199
5
4
200
0
200
5
The Economy Today

Pakistan raised back its Foreign Reserves to a handsome $16.4 billion by October 2007.
Exceptional policies kept Pakistan's trade deficit controlled at $13 billion. Pakistan’s exports
increased to $18 billion. The revenue generation increased to become $13 billion and attracted
foreign investment of $8.4 billion. Since the beginning of 2008, Pakistan's economy has a downfall
due to war on terror. The War on Terror has created great instability and led to a decline in FDI from
a height of approximately $8bn to $3.5bn for the current fiscal year. Combined with high global
commodity prices, the dual impact has shocked Pakistan's economy, with gaping trade deficits, high
inflation and a crash in the value of the Rupee, which has fallen from 60-1 USD to over 80-1 USD in a few
months. For the first time in years, it may have to seek external funding as Balance of Payments support.
Economic Comparison of Pakistan 1999-2009
Indicator 1999 2007 2008 2009
$ 185
GDP $ 75 billion $ 160 billion $ 170 billion
billion
GDP Purchasing Power $ 580.6

$ 270 billion $ 475.5 billion $ 504.3 billion
Parity (PPP) billion
GDP per Capita Income $ 450 $ 925 $1085 $1250
Revenue collection Rs. 305 billion Rs. 708 billion Rs. 990 billion Rs. 1.05
trillion
5
Foreign reserves $ 700 million $ 16.4 billion $ 10 billion $ 14 billion
$ 18.45
Exports $ 7.5 billion $ 18.5 billion $ 19.22 billion
billion
Indicator 1999 2007 2008 2009
Textile Exports $ 5.5 billion $ 11.2 billion - -
KHI stock exchange (100- $ 5 billion at 700 $ 75 billion at $ 56 billion at

Index) points 14,000 points 9,000 points
Foreign Direct Investment $ 1 billion $ 8.4 billion $ 5.19 billion $ 4.6 billion
Debt servicing 65% of GDP 26% of GDP - -
Poverty level 34% 24% - -
Literacy rate 45% 53% - -
Rs. 880
Development programs Rs. 80 billion Rs. 520 billion Rs. 549.7 billion
billion
Factors Affecting Economy
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 Growth And Investment
 Agriculture
 Manufacturing
 Fiscal Development
 Money and Credit
 Inflation
 Capital Market
 Trade and Payments
 External and Domestic Debt
 Education
 Health And Nutrition
 Population, Labor Force and Employment
 Poverty
 Transport and Communication
 Energy
Manufacturing
Pakistan’s manufacturing sector is growing from 2000. In 1999, large scale manufacturing is 1.5%
and it is 19.9% in 2004-05. So it makes an average 8.8% by the end of 2007. Below is growth of large
scale manufacturing,
 1999-00 – 1.5%
 2000-01 – 11%
 2001-02 – 3.5%
 2002-03 – 7.2%
 2003-04 – 18.1%
 2004-05 – 19.9%
 2005-06 – 8.7%
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 2006-07 – 8.6%
 2007-08 – 5%
Finance
Pakistan’s finance and insurance sector department also showed a great development from
2000. In 2005, it is at Rs.311, 741 million. It shows a growth of 166% since 2000.
Stock market
“Business Week” the international magazine declared Pakistan’s stock market, the best
performing stock market index in the world, in the first four years of 21 st century. But in 2008, there is a
great decline in Pakistan’s economy due to uncertain political environment and many other reasons.
Tourism
Pakistan has diverse cultures, people and landscapes. Tourism in Pakistan is a growing
industry. To promoting Pakistan’s unique and various cultural heritages, PM launch "Visit Pakistan"
marketing campaign in 2007. In 2009, The World Economic Forum’s Travel & Tourism Competitiveness
Report ranks Pakistan as one of the top 25% tourist destinations for its World Heritage sites. Some
famous tourist spots are shown below,
Revenue
The income of a government from taxation, excise duties, customs, or other sources,
appropriated to the payment of the public expenses. The Board of Revenue has collected nearly one
trillion Rupees ($14.1 billion) in taxes in the 2007-2008.
Sectors of Pakistan Economy

Agriculture
Pakistan ranks fifth in the Muslim world and twentieth worldwide in farm output. About 25% of
Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in
the world. Agriculture accounts for about 23% of GDP and employs about 44% of the labor force. Zarai
Taraqiati Bank Limited is contributing a lot in our agriculture sector.
Industry
Pakistan ranks forty-first in the world and fifty-fifth worldwide in factory output. Pakistan's
industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing
are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40%
of the employed labor force. Merchandise exports mean export of goods not services. Other major
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industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food
processing.
Automobile industry
Pakistan is an emerging market for automobiles and automotive parts. The total contribution of
Auto industry to GDP in 2007 is 2.8%. Auto sector presently, contributes 16% to the manufacturing
sector which also is expected to increase 25% in the next 7 years. But in my opinion this prediction can’t
be correct due to high inflation and shortage of CNG.
CNG industry
Compressed Natural Gas (CNG) is a substitute for gasoline (petrol) or diesel fuel. It is considered
to be an environmentally “clean” alternative to those fuels. In 2009, Pakistan is one of the largest users
of CNG (compressed natural gas) in the world. Presently, more than 2,900 CNG stations are
operating in the country in 85 cities and towns. It has provided employment to many people. But now
this industry has a decline and shortage of CNG is creating a big problem for CNG station owners and the
employs working at these stations. Many CNG stations closed and many are going to close if we don’t
fight with the shortage problem of CNG.
Cement industry
Growth of cement industry is rightly considered a barometer for economic activity. In 1947, Pakistan
had inherited 4 cement plants with a total capacity of 0.5 million tons. The industry comprises of 29
firms, with the installed production capacity of 44.09 million tons. There are four foreign companies,
three armed forces companies and 16 private companies listed in the stock exchanges. The cement
sector is contributing above Rs 30 billion to the national exchequer in the form of taxes. Exchequer was
a part of the government’s hat was responsible for the management and collection of revenues. Cement
industry is also serving the nation by providing job opportunities and presently more than 150,000
persons are employed directly or indirectly by the industry.
IT industry
Pakistan’s IT industry has been rising steadily. The Government of Pakistan has been proactively
developing the IT sector in Pakistan. A few of the incentives offered include tax exemption till 2016,
establishment of IT Parks with low rent, foreign ownership of equity invested in IT and 100% repatriation
of profit allowed to IT companies. Profit repatriation is an important factor that determines whether
'foreign direct investment' in another country is actually profitable for the parent firm.
Textiles
Pakistan’s textile industry and clothing sector has always been a major contributor to the foreign
exchange earning and still contributes about 55% to the total exports.
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Textile exports in 1999 were $5.2 billion and rose to become $10.5 billion by 2007. Textile
exports managed to increase at a very decent growth of 16% in 2006. There is development in other
sectors and exports of other sectors increases therefore textile exports share in total export of Pakistan
has declined from 67% in 1997 to 55% in 2008.The top buyers of Pakistani textile goods are:
 USA
 UK
 Japan
 Korea
 Saudi Arabia
 Italy
 Turkey
 Germany
Services
In GDP the share of service sector is 53.3%. Transport, storage, communications, finance, and
insurance shares 24% of this sector, and wholesale and retail trade shares about 30%.
Communication
Pakistan won the prestigious Government Leadership award of GSM Association in 2006. In
2008, the mobile telephone market reached a subscriber base of 91 million users. In addition, there are
over 6 million landlines in the country with 100% fiber-optic network. The contribution of telecom sector
to the national exchequer increased to Rs 110 billion in the year 2007-08 on account of general sales tax,
activation charges and other steps as compared to Rs 100 billion in the year 2006-07. The top mobile
phone operators in Pakistan are:
 Mobilink (Parent: Orascom Telecom Holding, Egypt)

 Ufone (Parent: PTCL (Etisalat), Pakistan/UAE)
 Telenor (Parent: Telenor, Norway)
 Warid (Parent: Abu Dhabi Group / SingTel, UAE/Singapore
 Zong (Parent: China Mobile, China)
Electricity
Installed capacity
Electricity - total installed capacity: 19,505 MW (2007)
Electricity - Sources (2007)
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 Fossil fuel - 12,580 MW - 65% of total

 Hydro - 6,463 MW - 33% of total
 Nuclear - 462 MW - 2% of total
Pakistan is facing a serious shortage of electricity. We should make more dams, nuclear plants,
and we have large coal reserves so we should depend on coal and finally we can make solar plants for
producing electricity.
Exports
Pakistan's exports increased more than 100% from $7.5 billion in 1999 to stand at $18 billion in
the financial year 2007-2008. Pakistan
exports rice, furniture, cotton fiber, cement, tiles, marble, textiles, clothing, leather goods, sports goods,
surgical instruments, electrical appliances, software, carpets, rugs, ice cream, livestock
meat, chicken, powdered milk, wheat, seafood, vegetables, processed food items, Pakistani
assembled Suzuki’s (to Afghanistan and other countries), defense equipment, salt, marble,
onyx, engineering goods, and many other items. Pakistan now is being very well recognized for
producing and exporting cements in Asia and Mid-East.
Imports
Pakistan's imports stood at $30.54 billion in the financial year 2006-2007. Pakistan's single
largest import category is petroleum and petroleum products. Other imports include: industrial
machinery, construction machinery, trucks, automobiles, computers, computer parts, medicines,
pharmaceutical products, food items, civilian aircraft, defense equipment, iron, steel, toys, electronics,
and other consumer items.

The International Monetary Fund (IMF) is an organization of 186 countries, working to help the
development of global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty around the world.
The IMF works to help development of global growth and economic stability. It provides policy advice
and financing to members, in economic difficulties and also works with developing nations to help them
achieve macroeconomic stability and reduce poverty .
The IMF's fundamental mission is to help ensure stability in the international system. It does so
in three ways: keeping track of the global economy and the economies of member countries; lending to
countries with balance of payments difficulties; and giving practical help to members.
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What Does International Monetary Fund - IMF Mean?
An international organization created for the purpose of:

1. Promoting global monetary and exchange stability.
2. Facilitating the expansion and balanced growth of international trade.
3. Assisting in the establishment of a multilateral system of payments for current
transactions.
The IMF plays three major roles in the global monetary system. The Fund surveys and
monitors economic and financial developments, lends funds to countries with balance-of-
payment difficulties, and provides technical assistance and training for countries requesting it.
The IMF works to foster global growth and economic stability. It provides policy advice and
financing to members in economic difficulties and also works with developing nations to help
them achieve macroeconomic stability and reduce poverty. The IMF has a management team
and 17 departments that carry out its country, policy, analytical, and technical work. One
department is charged with managing the IMF's resources. The IMF is led by a Managing
Director, who is head of the staff and Chairman of the Executive Board. He is assisted by a First
Deputy Managing Director and two other Deputy Managing Directors. The Management team
oversees the work of the staff, and maintains high-level contacts with member governments,
the media, non-governmental organizations, think tanks, and other institutions. The IMF
currently employs about 2,400 staff, half of whom are economists. Most of them work at the
IMF's Washington, D.C., headquarters but a few serve in member countries around the world in
small IMF overseas offices or as resident representatives.
History of IMF
The International Monetary Fund was created in July 1945, originally with 45 members, with a
goal to stabilize exchange rates and assist the reconstruction of the world's international
payment system. Countries contributed to a pool which could be borrowed from, on a
temporary basis, by countries with payment imbalances (Condon, 2007). The IMF was
important when it was first created because it helped the world stabilize the economic system.
The IMF works to improve the economies of its member countries. The IMF describes itself as
"an organization of 187 countries (as of July 2010), working to foster global monetary
cooperation, secure financial stability, facilitate international trade, promote high employment
and sustainable economic growth, and reduce poverty".
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IMF Assistance to Pakistan

When IMF is advancing loans to their members, they not only analyze the economic
conditions of their members but the borrower will also have to frame its policies in the light of
directions given by IMF authorities.
The question in my mind is that when and how much was lent to Pakistan by IMF. And
what were the conditions imposed by IMF and what were the consequences of these loans.
Pakistan joined IMF on 11th July, 1950. IMF is providing financial assistance to Pakistan
since 1952. According to 1977 statistics, Pakistan borrowed 1193 million dollars from IMF. Since
1980, the fund has made four main agreements with Pakistan as,
1. In November,1980
2. In December, 1988
3. In February, 1994
4. In July, 1997
1. The Agreement Of 1980

Under this agreement, IMF provided $1.7 billion for the period of 1980-83. The biggest
condition against this loan was to reduce the fiscal deficit. For this purpose they asked the
Government to increase the prices of public enterprises like fertilizers, cement, electricity, clean
water, educational and health services. The indirect taxes should increase and subsidies should
be withdrawn. But the budget deficit in 1980-81 was 5.8% of GDP went to 9.1% in 1985-86.
When Government of Pakistan again asked IMF for assistance, they showed dissatisfaction over
our efforts to reduce fiscal deficit. Accordingly, IMF prepared a package of policies for Pakistan
and chalked-out a time-table for the required changes. IMF set the following conditions for
Pakistan:
1. Rupee be devalued by 20% in terms of dollar

2. The imports be liberalized
3. Prices should increase and subsides be withdrawn
4. The custom duty on imports be decreased and sales and exercise duty be imposed
in the country
5. The industrial sector is liberalized from govt. controls through de-regulations and
privatization.
13

During the period of 1988-91, IMF gave the assistance of $900 million to Pakistan in order
to remove the deficit in BOP by redressing structural problems. According to this agreement:
1. The current account deficit of BOP which was 4% of GNP in 1987 was to be reduced to
3.3% of GNP in 1988-89, 2.7% in 1989-90, and 2.5% of GNP in 1990-91.
2. The foreign debt burden which was 31% of GNP in 1987 would be decreased to 25% in
19990-91.
3. The overall fiscal deficit of federal and provincial govt. which was 8.5% of GDP in 1986-
87 would be reduced to 4.8% of GDP in 1990-91.
4. The bank borrowings be reduced to 1% of GDP, while non-bank borrowings to 3.6% of
GDP.
5. The tax structure will be changed. The tax-base will be expanded and tax collection
system will be improved.
6. The system of general sales tax will be introduced.
7. The federal and provincial govt. will control their expenditures, while the price of social
services will be increased.
The main objective of this agreement was to reduce fiscal deficit. But the govt. failed to
meet these conditions. The budget deficit which was 8.7% of GDP in 1990-91 decreased to 8%
GDP in 1992-93. This means that the budget deficit could not be decrease appreciably.

The aim of this agreement was to reduce the financial deficit to 4% of GDP in 1994-95
and to 3% of GDP in 1995-96. But this agreement was renegotiated in December, 1995. As a
result, this target was set at 5% of GDP for 1994-95 and 4% for 1995-95. In this agreement IMF
stressed upon early conditions. As the price of gas, electricity, water, education and health
services should be increased.
The govt. of Pakistan made some efforts but little success was attained. The budget
deficit was 5.8% of GDP in 1994-95 and the target for 1995-96 was set at 5% of GDP. This led to
create a suspension in the attainment of loan of $1.4 billion could be raised. Then the govt. of
Pakistan failed to complete the conditions of IMF. Then the finance minister re-negotiated with
IMF. As a result, a new agreement took place between Pakistan and IMF where the fiscal deficit
was stipulated at 4% of GDP for 1996-97. Against it, the agreement was extended to
14
September, 1997, instead of February, 1997, while the amount of loan was raised from $250
million to $850 million.
Government of Pakistan neither reduces its expenditure nor raised tax revenues. The
IMF failed to learn any lesson from Pakistan’s experience. Government of Pakistan’s
dependence remains the same and efforts for new agreement started.

In 1997, IMF prepared a ‘Medium Term Policy Framework Paper’ for the growth and the
stabilization of the economy of Pakistan. This period is of three years from 1 st July, 1997 to 30
June, 2000. Pakistan demanded a lot of amount as financial aid but IMF sanctioned $500 million
on January 14, 1999. IMF suggested conditionality in order to bring structural changes in the
economy. The IMF issued a long structure. Government of Pakistan applied many suggestions
but still they failed to impose sales tax at retail level. The rupee was devalued in 1998. The
trade was liberalized. IMF has associated its tranche ($280 million) with the issue of IPPs. It
means that unless govt. of Pakistan settles the issue with IPPs, they will not get any loan from
IMF.
The Year 2003-04

Most projects with IMF were suspended because Pakistan could not complete their
conditions. But first time in 2004, Pakistan got the entire amount which was sanctioned by IMF
on PRGF which is $1.47 billion dollars.
Pakistan exports grew during this period. Although IMF and other financial institutions
of the world have shown satisfaction over macroeconomic stability of the country, yet WB is of
the view that Pakistan has to face the problem of internal and external loans, and it will have to
reduce them.
The Year 2008

As a result of elections of 18 th February 2008, General Musharaf had to surrender and
Asif Ali Zardari became the president of Pakistan. At that time, the country was entrapped into
economic difficulties. Not only trade deficit had gone to $20 billion, but the fiscal deficit also
reached 4.7% of GDP. Foreign reserves had touched at lowest level.
The IMF's Executive Board has approved a $7.6 billion loan for Pakistan to support its
program to stabilize and rebuild the economy while expanding its social safety net to protect
the poor.
15
"The Government's program has two objectives: first, to restore overall economic
stability and confidence through a tightening of macroeconomic policies, and second, to do so
in a manner that ensures social stability and adequate support for the poor during the
adjustment process," said Juan Carlos Di Tata, the IMF mission chief to Pakistan.
Of the $7.6 billion loan, $3.1 billion will be made available by the IMF immediately to
strengthen the reserve position. And the regular monitoring of the economy by the IMF will
show how the macroeconomic objectives set by the Government are being met and whether
they need to be adjusted in the light of changing circumstances.
The Pakistan authorities have already taken some difficult steps to achieve these objectives:
energy subsidies have been cut and the interest rate has been increased to tighten monetary
policy. The authorities' program for the coming 24 months envisages a number of additional
steps:
 The fiscal deficit, excluding grants, will be brought to down from 7.4 percent of GDP in
2007/08 (starting July 1) to a more manageable 4.2 percent in 2008/09 and 3.3 percent
in 2009/10—in line with what it was three years ago. This fiscal adjustment will be
primarily achieved by phasing out energy subsidies and strengthening revenue
mobilization through tax policy and administration measures.
 The State Bank of Pakistan (SBP) will act on monetary policy to build its international
reserves, bring down inflation to 6 percent in 2010, and eliminate central bank financing
of the government. The program includes measures to improve monetary management
and enhance the SBP's bank resolution capacity, and avoid the use of public resources to
support the stock market.
 Expenditure on the social safety net will be increased to protect the poor through both
cash transfers and targeted electricity subsidies. The fiscal program for 2008/09
envisages an increase in spending on the social safety net of 0.6 percentage points of
GDP to 0.9 percent of GDP.
The Year 2009

The IMF’s Executive Board agreed to increase lending to Pakistan by an extra $3.2 billion
to fund priority spending and help the government provide assistance to nearly three million
people displaced by military operations and a difficult security situation.
The Board reviewed progress under a $7.6 billion Stand-By Arrangement for Pakistan
that was agreed in November last year. During the August 7 discussion, Directors agreed to
16
increase lending by $3.2 billion, after a request from the Pakistan government to meet the
country’s increased balance of payments needs resulting from higher oil prices.
Effects of IMF Programs

IMF authorities think that the problem of Pakistan increased because of non-compliance
with the IMF programs. But it is not true. The IMF program has led to increase the charges of
gas, electricity, petrol and telephone. The imposition of sales tax and cut in tariff rates on the
advice of IMF has greatly affected the incomes of the poor and middle class earners. They have
widened the gaps between the incomes. The absolute poverty has increased which has
promoted unsocial activities. But this is not all because of IMF, we are responsible for it. If our
fiscal deficit and trade deficit decreases then we should not go to IMF for financing. But we
should be prepared to pay more in the form of taxes and reduces imports; particularly oil etc,
the dependence on IMF may go down.
World Bank Assistance to Pakistan

 They are supporting reforms at both the federal and provincial level.
For encouraging growth, investment, and employment generation, the Federal and
Provincial Governments have been implementing various reform programs. In June 2007, the
World Bank approved a US$350 million to support ongoing implementation of the
Government's Poverty Reduction Strategy. At the provincial level, the Bank approved
operations worth US$430 million for Punjab, Sindh and the North West Frontier Province to
help improve irrigation, education and human development indicators.
 They are working with Pakistan Poverty Alleviation Fund to bring difference
in the lives of poor.
The World Bank funded Pakistan Poverty Alleviation Fund Project (PPAF) is designed to
reduce poverty and empower the rural and urban poor in Pakistan through the provision of
resources and services to the poor, especially women. This is being achieved through an
integrated approach that includes building institutions of the poor and then providing them
with micro-credit loans; grants for small scale infrastructure projects; training and skill
development and social sector interventions. The program is impacting over 10 million people.
PPAF has issued 1.5 million micro-credit loans, (average loan-size US$ 150), benefiting nearly 9
million people.
 They are helping the victims of the Earthquake.
The October 2005 earthquake in Pakistan destroyed or damaged around 575,000 rural
houses, and rendering over 3 million people without shelter in North West Frontier Province
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(NWFP) and Azad Jammu and Kashmir (AJ&K). In response, the government created the
Earthquake Relief and Reconstruction Authority (ERRA) and launched an ambitious US$1.5
billion owner-driven rebuilding program - largely suited to the mainly rural affected population.
It is partially funded by World Bank.
 They are working with the government to improve education outcomes.
The World Bank is providing assistance to the Government of Pakistan in education reforms,
at both the national and the provincial level. This support is provided through development
policy operations with a strong focus on primary and secondary education. These programs
target increasing participation of girls and children from poorer houses. The World Bank is also
assisting the government in improving the quality and relevance of its higher education and
technical and vocational training system. They have a strong focus on improving the quality of
education.
 They are joining with international partners to help Pakistan fight polio.
They approved two projects US$42.71 million in 2003 and US $ 74.27 million in 2006 for
Pakistan to purchase the oral polio vaccine. The loan to Pakistan will help the country’s Polio
Eradication Initiative which aims to make Pakistan a Polio free country. Since 1997 the number
of polio cases has decreased from 1147 to 31 in 2007. The first project has been successfully
completed.
 They are focusing on un-served and underserved low-income communities.
In NWFP and AJK, Bank projects are supporting delivery of cost effective and sustainable
community development schemes, and basic infrastructure and services. To achieve this, the
role and capabilities of local governments at the district and lower levels have been
strengthened. In AJK, the project has already reached a population of 893,000 against the
original target of 830,000, through 320 CBOs. Out of the 54 Tehsil Municipal Authorities (TMA)
in NWFP, 50 are now participating in the Project.
 They are helping Pakistan prevent the spread of HIV/AIDS.
The key challenge facing the country is to expand and improve quality of HIV preventive
services to vulnerable groups that are most at risk of contracting and transmitting the disease.
These include sex workers and injecting drug users. The Bank is supporting the Government
efforts to control AIDS through the HIV/AIDS Prevention Project designed to prevent the
disease from becoming established in these populations, while at the same time working to
18
protect these groups from stigmatization. A key focus of the project is delivery of HIV
preventive services to high risk populations through public-private partnerships. A total of 17
service delivery packages for injecting drug users (IDUs), sex workers, truckers and jail inmates
have been contracted out to NGOs by the National and Provincial AIDS Control Programs
covering most major cities across the country.
 They are helping to ‘improve trade flows’ and ‘lower transit costs and
times’.
In 2005, the Government of Pakistan (GOP) launched major initiatives around the National
Trade Corridor Improvement Program (NTCIP) to reduce the cost of trade and transport
logistics and bring services' quality to international standards in order to reduce the cost of
doing business in Pakistan and ultimately enhance competitiveness and industrialization.
 They rely on local expertise.
They rely mostly on local expertise. As 90% of their staff is local who are working for
Pakistan. While a large part of World Bank’s value is its global experience and expertise, local
knowledge is indispensable to effective development.
 Assistance:
During the past four years from FY 2006 - 2009, the Bank has approved 30 projects of total
US$3.7 billion for Pakistan.
The World Bank is currently working with the Government of Pakistan to prepare a new
Country Assistance Strategy (CAS) for the period FY2010-2013.
Suggestion
Pakistan is a country having many natural resources in it. We should be self-sufficient,
we should rely on ourselves. Sincerity is the key to success so we should be sincere with our
country and work hard for its development. If we have financial crisis, we should not beg for aid
from IMF and World Bank or any other organization, but we can handle the problem by relying
on ourselves. We should pay more taxes and we should try to remove corruption from every
department of our beloved homeland. The government should make such opportunities that
19
foreign investment is attracted towards us. By applying these things we don’t need to depend
on IMF and World Bank.
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Economic Indicators of Business: International Monetary Fund

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Economic Indicators of Business: International Monetary Fund

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Economic Indicators of

Submitted to Sir Arslan Wasti

1. The Agreement Of 1980....................................................................................................................13

The economy of Pakistan is the 27th largest economy in the world in terms

and other industries.

Inflation Index Per Capita Income

The Economy Today

Economic Comparison of Pakistan 1999-2009

Indicator 1999 2007 2008 2009

GDP Purchasing Power $ 580.6

GDP per Capita Income $ 450 $ 925 $1085 $1250

Foreign reserves $ 700 million $ 16.4 billion $ 10 billion $ 14 billion

Indicator 1999 2007 2008 2009

Textile Exports $ 5.5 billion $ 11.2 billion - -

KHI stock exchange (100- $ 5 billion at 700 $ 75 billion at $ 56 billion at

Debt servicing 65% of GDP 26% of GDP - -

Poverty level 34% 24% - -

Literacy rate 45% 53% - -

Factors Affecting Economy

 Growth And Investment

 Money and Credit

 Trade and Payments

 External and Domestic Debt

 Health And Nutrition

 Population, Labor Force and Employment

 Transport and Communication

Sectors of Pakistan Economy

 Mobilink (Parent: Orascom Telecom Holding, Egypt)

Electricity - total installed capacity: 19,505 MW (2007)

Electricity - Sources (2007)

 Fossil fuel - 12,580 MW - 65% of total

International Monetary Fund

What Does International Monetary Fund - IMF Mean?

An international organization created for the purpose of:

IMF Assistance to Pakistan

1. The Agreement Of 1980

1. Rupee be devalued by 20% in terms of dollar

2. The Agreement Of 1988

3. The Agreement Of 1994

4. The Agreement Of 1997

The Year 2003-04

The Year 2008

The Year 2009

Effects of IMF Programs

World Bank Assistance to Pakistan

 They are working with the government to improve education outcomes.

 They are focusing on un-served and underserved low-income communities.

 They are helping Pakistan prevent the spread of HIV/AIDS.

 They rely on local expertise.

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