Uploaded by Arfan Nawaz



The International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership.

The IMF’s fundamental mission

is to ensure the stability of the international monetary 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.

Economic Surveillance

The IMF oversees the international monetary system and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.


The IMF provides loans to member countries experiencing actual or potential balance of payments problems to help them rebuild their international reserves, stabilize their currencies, continue paying for imports, and restore conditions for strong economic growth, while correcting underlying problems.

Capacity Development

The IMF works with governments around the world to modernize their economic policies and institutions, and train their people. This helps countries strengthen their economy, improve growth and create jobs.

History Pakistan Relation with IMF

Pakistan became a member of the IMF in 1950 and the first time the Government of Pakistan opted for a loan from the IMF was in 1958. This was a Standby Agreement (SBA) amounting to USD 25 Million.

However, due to political disturbance, this loan was cancelled soon after. Pakistan received its second and third SBAs in 1965 and 1968, during Field Marshal Ayub Khan’s era. As observed by Barro and Lee (2002) Pakistan was among the five developing countries which had the highest number of professional staff at the IMF in 1999. Birdsall and Diwan (2003) show that countries with higher debt, especially those indebted to international organizations, have indeed received larger net transfers than other countries. Based on the data on external debt and resource flows to Pakistan, it appears that Pakistan's debt stock has grown very rapidly in the last three decades. As the IMF is often depicted as a heartless moneylender which forces poor countries to adopt bad policies and take its `pound of flesh` back while the countries sink further into poverty. Mainly, in case of Pakistan when we want to measure and check the effect of policies and conditions of financial institutions as well as Govt. borrowing decisions, not direct policies of Pakistan can measure the growth and other external indicators of IMF`s policies on taxation system exchange rate, borrowing decisions, GDP growth, imports and exports quota`s, tariffs IMF purchases are also affected. Basically the economy’s growth is measured by its GDP. So in this research paper GDP has been taken to check the Economy of Pakistan. Here the research is going to analyse. The Role of IMF in the Pakistan’s economy but as being a developing country Pakistan does not any control on IMF’s policies and data on IMF is not available, so its limitation for this research that’s why it’s proxy has been used as Government borrowing. The purpose of this research is to check and elaborate the relation of IMF charges with Government borrowing and the variables related to it.



16-MAR-1965 17-Oct-1968 11 -Agu-1973 11-Nov-1974 9-Mar-1977




37.5 Million 75 Million 75 Million 75 Million 80 million 24-Nov-1980 2-Dec-1981 28-Dec-1988 ZIA-UL-HAQ (Dictator) ZIA-UL-HAQ (Dictator) PAKISTAN PEOPLES PARTY 1.2 Billion as extended fund facility 919 million 273.1 million as stand by loan 22-Feb-1994 13-Nov-1995 20-Oct-1997 29-nov-2000 6dec-2001 24-Nov-2008 4-Dec-2013 PAKISTAN PEOPLES PARTY PAKISTAN PEOPLES PARTY NAWAZ SHARIF PARVIZ MUSHARAF PARVIZ MUSHARAF PAKISTAN PEOPLES PARTY NAWAZ SHARIF 562.5 million as extented fund facility & extended credit 562.5 million 1.13 billion 465 million 1 billion 7.2 billion 4.3 billion as extend fund

2014-2015 2016-2017 NAWAZ SHARIF 24.9 billion NAWAZ SHARIF


10.1 billion

53.3778 BILLION

Pakistan Financial Position in the Fund as of September 30, 2018

Summary of IMF members’ quota, reserve tranche position, SDR holdings, outstanding credit, recent lending arrangements, projected payments due to the IMF, and historical transactions with the IMF.

I. Membership Status:

Joined: July 11, 1950;

II. General Resources Account:

Quota IMF's Holdings of Currency (Holdings Rate) Reserve Tranche Position

III. SDR Department:

Net cumulative allocation Holdings

SDR Million




SDR Million



Article VIII








IV. Outstanding Purchases and Loans:

Extended Arrangements

SDR Million




V. Latest Financial Arrangements:

Date of Type Arrangement EFF Stand-By Sep 04, 2013 Nov 24, 2008 ECF

1/ 1/

Formerly PRGF.

Dec 06, 2001 Expiration Date Sep 30, 2016 Sep 30, 2011 Dec 05, 2004 Amount Approved (SDR Million) 4,393.00 7,235.90 1,033.70 Amount Drawn (SDR Million) 4,393.00



VI. Overdue Obligations and Projected Payments to Fund 2/ (SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming Principal Charges/Interest

Total 2/

2018 30.00



2019 420.00



2020 660.00



2021 762.17



2022 702.17



arrears will be shown in this section.

VII. Implementation of HIPC Initiative:

Not Applicable

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):

Not Applicable

IX. Implementation of Catastrophe Containment and Relief (CCR):

Not Applicable As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.

Prepared by Finance Department

Now Pakistan is seeking loan package of up to $8 billion from the International Monetary Fund (IMF)

The sources said that the IMF could place strict conditionalities, forcing Pakistan to seek additional loans for meeting those restrictions and this could expand the loan facility to $12bn. Pakistan began exploring the possibility of yet another loan package with the IMF while the PML-N was still in power and the exploratory talks continued under the interim government as well. The final decision, however, was announced on Monday night when Finance Minister Asad Umar confirmed that the government was going to the IMF to bail Pakistan out of its foreign currency crisis. The announcement followed the highest single-day loss in a decade in the stock market, which plunged by over 1,300 points, losing almost Rs270bn of its capitalisation. On Tuesday, the IMF said that it would listen to Pakistan’s request for financial support “very, very attentively”, as it did with any member with good standing. Pakistan has received more than a dozen financial support packages from the IMF in the past. It completed the last three-year package of $6.4bn in August 2016, which was 216 per cent of Pakistan’s quota at the IMF. The previous programme also aimed at “bringing down inflation and reducing the fiscal deficit to more sustainable levels”. It included measures to “help achieve higher and more inclusive growth, in particular through addressing bottlenecks in the energy sector”. At a news briefing on Tuesday, IMF chief economist Maurice Obstfeld outlined the economic challenges that Pakistan was facing now and also commented on its ability to finance itself. Asked how would the IMF react to Pakistan’s request for an emergency bailout package, he said: “As with any member in good standing, they are certainly entitled to request financial support from the Fund. So, we will be listening very, very attentively when and if they come to us.” He noted that Pakistan has “frequently… had programmes in the past several times… and that is a very good sign going forward”.

Current deficit of Pakistan

The current account deficit, which remains the single largest challenge for economic managers, shot to a record high of $17.994 billion (5.7% of GDP) at the end of fiscal year ended June 30, 2018 mainly due to exorbitant imports and less-than-projected inflows. This is 44.7% higher than $12.44 billion recorded in the previous fiscal year 2017. State Bank of Pakistan (SBP) Governor Tariq Bajwa said last week that the deficit has grown to an “unsustainable level” due to soaring aggregate demand in the economy.

Foreign exchange: SBP’s reserves fall to alarming level after 4.4% decline

To tame demand, the central bank has let the rupee fall by close to 28% to Rs134 to the US dollar since December 2017, and made borrowing expensive by increasing the benchmark interest rate by 175 basis points to 7.5% in the last six months. “The Real Effective Exchange Rate (rupee-dollar parity) and monetary policy (the benchmark interest rate) are two effective tools available with the central bank to deal with the situation,

Loan impact on foreign exchange

Today US Dollar Rate to Pakistan Rupee (1 USD to PKR) is 133.82 PKR, . This US Dollar to Pakistan Rupee conversion is based on open market rates which are set by the currency exchange dealers of Pakistan. Easily find the 1 USD buying rate and selling rate in Pakistan. You can also convert all major currencies .this is due to loan (IIMF) LAST MONTH USD RATE Recent changes for the last periods: Period 2 Days 3 Days 1 Week 2 Weeks 1 Month Chng,% +0.19% +7.12% +7.12% +7.12% +7.13% Ex-Rate 132.75 124.16 124.16 124.16 124.15 140 120 100 80 60 40 20 0 2 Days 3 Days 1 Week 2 Weeks 1 Month

Last month Rates for the GBP/EUR currency

IMF impact on GBP

Ex-Rate Chng,% Ряд1

OCT-2018 Open Close Mid

180 175 170 165 160 155 150 3 2 1 12 11 10 9 8 5 4 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 174.06 173.88 161.59 160.72 160.53 161.07 160.84 160.39 160.1 160.54 174.32 172.89 162.29 161.49 160.51 160.93 159.23 159.46 160.11 160.6 173.15 174.275 161.94 160.985 160.52 160.86 160.035 159.925 159.455 160.285 Ряд1 Ряд2 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 1 GBP = 12 11 10 9 8 5 4 3 2 1


oct-2018 13 12 11 10 9 8 7 6 5 4 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = PKR 154.24328 PKR 154.24328 151.979 153.69845 141.49342 141.30422 141.53134 141.68969 142.52017 142.59228

3 2 1 1 EUR = 1 EUR = 1 EUR = 141.79229 142.50149 142.69588 160 155 150 145 140 135 130 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 1 EUR = 12 11 10 9 8 7 6 5 4 3 2 1 Ряд1


160 140 120 100 80 60 40 20 0

2006 60.214 30 Jun 2007 60.406 30 Jun 2008 68.281 30 Jun 2009 81.39 30 Jun 2010 85.463 30 Jun 2011 85.989 30 Jun 2012 94.627 30 Jun 2013 99.114 30 Jun 2014 98.809 30 Jun 2015 101.79 05-jun 2016 104.76 30-jun 2017 104.89 Current 133.46 30-JUN Oct-18

Ряд1 Pakistan maintains foreign reserves with State Bank of Pakistan. The currency of the reserves was solely US dollar incurring speculated losses after the dollar prices fell during 2005, forcing the then Governor

SBP Ishrat Hussain to step down. In the same year the SBP issued an official statement proclaiming diversification of reserves in currencies including Euro and Yen, withholding ratio of diversification. Following the international credit crisis and spikes in crude oil prices, Pakistan's economy could not withstand the pressure and on October 11, 2008, State Bank of Pakistan reported that the country's foreign exchange reserves had gone down by $571.9 million to $7749.7 million.

[115] The foreign exchange reserves had declined more by $10 billion to a level of $6.59 billion. in June 2013 Pakistan was on the brink of default on its financial commitments. Country's Forex reserves were at an historic low covering only two weeks' worth of imports. Today in November 2017 Pakistan's Foreign exchange reserves are at a comfortable level (20 billion dollars), sufficient to cover about 3 months of imports.


The maximum number of loans – amounting to $10.1 billion, the highest taken out in any single year during the country’s 70-year history – was obtained during the last year of Nawaz’s government. Starting from July 2013, with every passing year, the quantum of external debt kept growing due to the government’s inability to implement policies that could have ensured sufficient non-debt creating inflows. The Supreme Court of Pakistan on Friday disqualified Nawaz on concealment of assets charges. Former finance minister Ishaq Dar would also have to face a reference in the accountability court over charges of a 91-time increase in his assets, which did not match his known sources of incomes. On October 19, 2016, the director general debt at the finance ministry had informed the Senate Standing Committee on Finance that from July 2013 to June 2016, the PML-N government took $25 billion worth of fresh loans. He had said that net addition to external debt during the three year period was $13 billion. In 2013-14, the net increase in the external debt was roughly $3 billion. Similarly, in 2014-15, the net increase in debt was $4.42 billion, higher by 53% over the increase reported in the preceding year. There was a net addition of $5.6 billion in the country’s external debt during the fiscal year 2015-16, showing a growth of 28.2% over the increase in foreign debt in 2014-15, according to the ministry.

During the fiscal year 2016-17, the last government had borrowed $10.1 billion and out of which it returned about $5 billion loans. The latest IMF report on Pakistan shows the country’s external debt at $79.2 billion by June 2017. It was $60.9 billion when the PML-N took the control of the government, according to the report. That means the government added $18.3 billion to the external debt. In June 2013, the gross official reserves held by the State Bank of Pakistan stood at $6 billion, which increased to $16 billion by June 2017. The entire increase of $10 billion in the official foreign currency reserves was the result of borrowings, as during this period exports kept on declining. The remaining $8 billion external debt was taken to meet the balance of payments requirements.

Pakistan debt servicing cost balloons to Rs15 trillion

According to sources in the finance ministry, maintaining official foreign currency reserves at this level is critical to giving a perception of an economic turnaround; and the former finance minister was also very sensitive about the issues of official foreign currency reserves and rupee-dollar parity. Dar had always presented the position of the official foreign currency reserves as an example of strong economy. He would often ignore the structural weaknesses of the economy like declining levels of savings and investments in terms of Gross Domestic Product. The IMF’s Article-IV report shows that Pakistan’s gross external debt in terms of exports was 193.2% in 2013; and this ratio deteriorated to 294.4% as of June 2017. During this period, Pakistan’s gross external financing requirements also almost doubled to $17.2 billion from $9.1 billion.

While responding to deteriorating external sector situation, the finance ministry had said last week that “external borrowing is a routine and normal function of developing countries and Pakistan is no exception.” It had added that developing economies resort to borrowing to meet investment requirements, accelerate growth and create jobs. External borrowing is also necessitated to retire past debt, finance essential imports, build external buffers, and shore up external reserves to maintain external account sustainability in a global context. we can aynasis that when Pakistan received loan from IMF the foreign exchange rate of usd increased in 24nov-2008 when Pakistan received loan from the IMF and usd rate increase 68 to 81PKR (PPP) govt means the Pakistan curacy deprecated and the USD curracy application means the current govt was deficit in foreign exchange 2013 to 2017 usd price increase only 5PKR even the govt received loan from IMF .

Pakistan rises its interest rates

Pakistan has increased its interest rates by 1 percentage points, from 7.5% to an annual rate of 8.5%. The

key rates

a tool used by Central Banks to implement monetary policy. An increase in interest rates is used to slow down inflation and protect the currency.. This change is the first to have taken place since on July16th 2018, when the Central Bank increasedinterest rates by 1 percentage points to 7.5%. Here we show you the progression of interest rates in Pakistan. You can see interest rates in other countries in interest rates and see all the economic information about Pakistan in Pakistan economy .

Pakistan - Key rates Date Key rates

10/01/2018 07/16/2018 8.50% 7.50% 05/28/2018 01/29/2018 6.50% 6.00%


05/23/2016 09/14/2015 05/25/2015 03/24/2015 01/26/2015 11/17/2014 11/18/2013

Key rates

Forex reserves rose by 50% during FY 2013-14: SBP

Total liquid foreign reserves held by the country, including net foreign reserves held by banks other than the SBP, stood at $13.990 billion, up by 26.9% from $11.019 billion recorded at the end of 2012-13.


Foreign exchange reserves held by the State Bank of Pakistan (SBP) rose by

more than 50% in 2013-14, data released by the central bank on Thursday showed. Although foreign exchange reserves held by the SBP recorded a week-on-week nominal decrease of 1.7% on June 27, their year-on-year increase was clocked at 50.3%, with the reserves reaching $9.033 billion on the second-last day of fiscal year 2013-14. Foreign exchange reserves held by the central bank amounted to $6.008 billion at the end of FY 2012-13, SBP data shows

5.75% 6.00% 6.50% 8.00% 8.50% 9.50% 10.00%

Total liquid foreign reserves held by the country, including net foreign reserves held by banks other than the SBP, stood at $13.990 billion, up by 26.9% from $11.019 billion recorded at the end of 2012-13. However, the country saw its foreign exchange reserves dwindle quickly in the first half of the last fiscal year. They hit rock bottom at the end of January when they amounted to just $3.180.3 billion, thus signifying the import cover of less than one month. Subsequently, a series of actions from the finance ministry, including arm-twisting of exporters to make them bring back their export proceeds to the country without waiting for the stipulated limit of 120 days, strengthened the level of SBP-held foreign exchange reserves. According to data compiled by Elixir Securities, the performance of the country’s external account – which consists of a basket of economic measures relating to international transactions – remained strong during the first 11 months of 2013-14. It posted a surplus of $5.7 billion, which is up 1.6 times on a year-on-year basis. “Major improvement was evident in financial and capital accounts, as both turned positive, while the current account deficit increased by a mere 3% year-on-year,” research analyst Ujala Adnan wrote in a recent note issued to clients. Capital account balance increased to $1.7 billion in July-May, up 580% from $255 million recorded in the comparable 11-month period of 2012-13. Similarly, financial account balance clocked up at $4.5 billion in the first 11 months of 2013-14 as opposed to a negative $75 million recorded in the same months of the preceding fiscal year. While the sale proceeds of the Eurobond issue kept the financial account positive, heavy capital inflows from bilateral and multilateral sources spurred the capital account surplus in the outgoing fiscal year, she said. Pakistan received foreign direct investment (FDI) of $1.36 billion in the first 11 months of 2013 14, which is 2.5% higher than the FDI received during the comparable period of the preceding

fiscal year. However, the increase in foreign portfolio investment (FPI) over the same period was disproportionately highly mainly because of the Eurobond issue. Pakistan attracted $2.3 billion in FPI during the July-May period, which is about 22 times higher than the FPI of $102.3 million received in the comparable 11 months of the preceding fiscal year. “The external account strengthening seems sustainable under the umbrella of International Monetary Fund’s standby arrangement programme worth $6.7 billion, privatisation programme, 3G spectrum auction, loans from the World Bank, Asian Development Bank (ADB) and other bilateral and multilateral sources,” Adnan noted, adding that the planned issue of $500 million worth of Islamic bonds in the international market will improve foreign exchange reserves further. As opposed to net external inflows of $4.6 billion in 2013-14, the government has projected net external inflows of $5.4 billion in the current fiscal year. The government’s projection of loans appears to be ‘achievable,’ according to KASB Securities, based on the successful Eurobond issue in the last fiscal year that is currently trading at a significant premium. “Despite ambitious projections on the external front, we believe the realisation of project/programme loans as well as successful Eurobond and Sukuk bonds can boost foreign exchange reserves,” it said, noting that total liquid foreign exchange reserves are expected to increase to $17 billion by the end of the current fiscal year.


The country''s foreign exchange reserves have been declining consistently and State Bank of Pakistan''s (SBP) statistics show that country''s foreign reserves have further plunged by some $296.4 million during the last week. Country''s foreign exchange reserves have declined from the level of over $15.074 billion to $14.7779 billion during the week ended on February 2, 2008. The level of $14.77 billion is the lowest level of current fiscal as it was stood at 15.6137 billion dollar on the beginning of current fiscal year, 2007-08. During the last week foreign exchange reserves held by SBP have declined by $285.8 million to 12.5293 billion dollar during a week. Moreover, reserves held by banks also show a decline of $106 million to $2.2486 million during the week ended on February 2, 2008.

The major decline in the foreign exchange reserves has witnessed after the imposition of state of emergency in the country, which shows an average decline of some $0.53 billion monthly during the last three months. During the last 12 weeks, overall foreign exchange reserves have shrunk by some 10 percent or $1.59 billion to $14.7779 billion from $16.3725 billion. A major decline has been witnessed in the SBP-held reserves, which dipped by 11.5 percent or $1.636 billion to $12.5293 billion after the imposition of emergency rule in the country. On November 3, 2008, the reserves were stood at $14.1661 billion. While, the reserves held by the banks have up by $422 million to $2.2486 million during the week ended on February 2, 2008 as compared to $2.2064 billion in first week of November. Economists are terming the declining exchange reserves as another setback for the economy, apprehending that the reserve would further dip if new privatisation transaction are not done in the near future. The post-emergency outflows from the SCRA account and high payments on account of oil import bills are the main reasons behind this decline, they added.

Pakistan Economic Outlook

September 18, 2018

Pakistan looks increasingly unstable as it grapples with persistent economic imbalances. The trade deficit further widened over the same month last year in August, although stronger remittance inflows should partly offset it. At its first meeting, the newly formed Economic Advisory Council discussed measures such as an import ban on cheese and other consumer goods to curb the current account deficit, which ballooned in FY 2018 due to robust imports stemming from higher oil prices and projects linked to the China-Pakistan Economic Corridor. Foreign exchange reserves have been falling as a result and many analysts expect Pakistan may soon turn to the IMF for a bailout. It could, however, first seek assistance from China or Saudi Arabia to avoid IMF requirements.

Pakistan Economic Growth

Growth is expected to slow in FY 2019 as the country’s twin deficits continue to weigh on the outlook. Panelists expect growth of 4.7% in FY 2019, unchanged from last month’s estimate, and 4.8% in FY 2020.

Pakistan Economy Data

Population (million) GDP per capita (USD)

2013 2014 2015 2016 2017

183 186 190 194 197 1,267 1,314 1,428 1,466 1,547 231 245 271 284 305 GDP (USD bn) Economic Growth (GDP, annual variation in %) 3.7





Consumption (annual variation in %) 2.1





Investment (annual variation in %) Industrial Production (annual variation in %) Unemployment Rate Fiscal Balance (% of GDP) Public Debt (% of GDP) Money (annual variation in %) 2.6














- -8.2















Inflation Rate (CPI, annual variation in %, eop) 5.9





Inflation Rate (CPI, annual variation in %) Exchange Rate (vs USD) 7.4










Policy Interest Rate (%) Exchange Rate (vs USD, aop) Current Account (% of GDP) Current Account Balance (USD bn) Trade Balance (USD billion) Exports (USD billion) Imports (USD billion) 9.00



































Exports (annual variation in %) Imports (annual variation in %) International Reserves (USD) External Debt (% of GDP)

2013 2014 2015 2016 2017





















Sample Report

5 years of Pakistan economic forecasts for more than 30 economic indicators.


According to a Business Recorder exclusive, receivables of Pakistan State Oil (PSO), already high due to overdue payments from the power sector have risen by 23 billion rupees - an amount payable by Sui Northern Gas Pipelines Ltd (SNGPL). The reason: failure to clear payments on re-gasified liquid natural gas (RLNG) with total purchases by SNGPL valued at 424.85 billion rupees with 401.75 billion rupees paid up by April this year. Around 10 billion rupees of the overdue amount, 43 percent, is owed by two independent power producers (IPPs) - Rousch Power and Fauji Kabirwala Power Company - reflecting the amount of their receivables from their consumers. The rest of the receivables are due from government power producers, fertilizer manufacturers, compressed natural gas stations, industries and other consumers. The debilitating energy sector's circular debt begins with PSO, the state-run company empowered to import not only oil and products but also RLNG, and its sustained failure to ensure bill clearance by its clients who, in turn, are unable to ensure payment of their dues from their end consumers. This is the crux of the problem and it has recently surfaced in the gas sector and is subsequent to the then Abbasi-led Petroleum Ministry and Natural Resources signing a 15-year contract with Qatargas in February 2016. Without going into the merits or demerits of the contract or those made since with other foreign companies to procure RLNG, the fact of the matter is that the circular debt reflects massive inefficiencies in the system which are paid for by the common man in ever-rising tariff rates. This is a serious problem and must be promptly dealt with because this could well be the start of the circular debt in the gas sector that continues to cripple the capacity of the power sector to deliver capacity output; and this in spite of the significant rise in generation capacity. At present, the energy sector's circular debt is estimated at 1.1 trillion rupees, about 514 billion rupees receivables sourced to within the sector, referred to as the flow, while the rest is parked in the Power Holding Private Limited (PHPL), referred to as the stock of debt on which the general public pays a surcharge for enabling the government to pay interest on past loans and no attempt has yet been made to pay off the actual debt incurred. The Power Division cites a number of reasons for the escalation in the circular debt notably: (i) 2016-17 witnessed quarterly tariff adjustments not determined by the regulator which added a whopping 70 billion rupees and which could have been collected from the end consumers

Pakistan Foreign Direct Investment

1997 - 2018 | Monthly | USD mn | State Bank of Pakistan

S h a r e t o L i n k e d I n S h a r e t o T w i t t e r S h a r e t o M o r e S h a r e t o E m a i l S h a r e t o C o p y L i n k Pakistan's Foreign Direct Investment (FDI) increased by 291.5 USD mn in Jun 2018, compared with an increase of 237.9 USD mn in the previous month. Pakistan's Foreign Direct Investment: USD mn net flows data is updated monthly, available from Jul 1997 to Jun 2018. The data reached an all-time high of 1.3 USD bn in Jun 2008 and a record low of 53.9 USD mn in Jun 2015. The difference between the Total and the summation of data per country is due to the zero value of some countries. Zero refers to the amount of less than $50,000. In the latest reports of Pakistan, Current Account recorded a deficit of 5.8 USD bn in Jun 2018. Pakistan's Direct Investment Abroad expanded by 3.0 USD mn in Jun 2018. Its Foreign Portfolio Investment fell by 123.0 USD mn in Jun 2018. The country's Nominal GDP was reported at 312.6 USD bn in Jun 2018.

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What was Pakistan's Foreign Direct Investment in Jun 2018?

Summary of Foreign Investment in Pakistan


The primary objective of the Index is to have a benchmark by which the stock price performance can be compared to over a period of time. In particular, it is designed to provide investors with a sense of how the market is performing. Thus, it is similar to other indicators that track various sectors of the economic activity such a the gross national product, consumer price index, etc.

Some major international indices are NYSE, FTSE (London), NZSE 40, SENSEX 30 KSE 100 Index

On November 1, 1991 the KSE 100 Index was introduced

. It is capital weighted index and consists of 100 companies representing about 86% of market capitalization of the Exchange. In November 1994 it was recomposed by the Baring Securities London and rules were framed for its re composition. Karachi Stock Exchange 100 Index (KSE-100 Index) is a stock index acting as a benchmark to compare prices on the Pakistan Stock Exchange (PSX) over a period. In determining representative companies to compute the index on, companies with the highest market capitalization are selected. However, to ensure full market representation, the company with the highest market capitalization from each sector is also included. History

991-2006 (Steady growth)

The index was launched in November 1991 with a base of 2,000 points. By February 2007, it had skyrocketed to 12,285 points.


2007 (Record breaking growth)

KSE-100 index touched the highest ever benchmark of 14,814 points on December 26, 2007, a day before the assassination of former Prime Minister Benazir Bhutto, when the index nosedived.


2008 Global crisis

       April 20 : Karachi Stock Exchange achieved a major milestone when KSE-100 Index crossed the psychological level of 15,000 for the first time in its history and peaked 15,737.32 on 20 April 2008. Moreover, the increase of 7.4 per cent in 2008 made it the best performer among major emerging markets.

[3][4] May 23: Record high inflation in the month of May, 2008 resulted in the unexpected increase in the interest rates by State Bank of Pakistan which eventually resulted in sharp fall in Karachi Stock Exchange.

[5][6] July 17 :Angry investors attacked the Karachi Stock Exchange in protest at plunging Pakistani share prices.

[7][8] July 16 : KSE-100 Index dropped one-third from an all-time high hit in April, 2008 as rising pressure on shaky Pakistan's coalition government to tackle Talibanmilitants exacerbates concern about the country's economic woes.

[9] August 18: KSE 100 Index rose more than 4% after the announcement of the resignation of President Pervez Musharraf but Credit Suisse Group said that Pakistan's Post-Musharraf rally in Stock Exchange will be short-lived because of a rising fiscal deficit and runaway inflation.

[10][11] August 28 :Karachi Stock Exchange set a floor for stock prices to halt a plunge that has wiped out $36.9 billion of market value since April.

[12] December 15: Trading resumes after the removal of floor on stock prices that was set on August 28 to halt sharp falls.


2009-2010 (Quick recovery)

The index recovered quickly in 2009 and 2010 reaching new highs.

2011-2012 (Best emerging market)

As at 7 November 2012 index recorded highest level of 16,218 points and now KSE is being considered as a best emerging market in Asia with returns in financial year 2011-2012 up to 40%-50%.

2013-2014( post-elections)

Karachi's KSE-100 Stock Market Index was up 49.4% (37% in US$ terms) in 2013, beating all but four stock indices in the world. It handily beat Morgan Stanley's MSCI emerging market index which remained essentially flat. By comparison, India's main stock index rose just 8.89% in the same period. The remaining three BRIC countries--Brazil, Russia and China-- all saw their key stock indices decline in 2013. As of April the 30th KSE-100 Index recorded a new increase in its value standing at 28,913 points, that is more than 45.2% since the last fiscal year of 2012-2013.

[14] Returns of 12 out of the 21 equity-based conventional mutualfunds operating in Pakistan remained higher than the benchmark stock index in 2014. The remaining nine equity funds underperformed the Karachi Stock Exchange (KSE) 100-Share Index until December 30, according to statistics compiled by the Mutual Funds Association of Pakistan (Mufap). The KSE-100 index is typically the benchmark for almost all conventional equity funds operating in the cou. The index stood at 31,954 points at the end of the second-last trading session of 2014, up 26.49% from the beginning of the calendar year when the reading was 25,261.

Other equity funds that posted returns higher than the benchmark index (until December 30) were NAFA Stock Fund (37.91%), Pakistan Stock Market Fund (35.6%), Lakson Equity Fund (32.77%), United Stock Advantage Fund (32.08%), ABL Stock Fund (31.16%), PICIC Stock Fund (30.35%), Alfalah GHP Alpha Fund (29.78%), IGI Stock Fund (28.55%) and First Capital Mutual Fund (27.21%). Share prices of some stocks rose astoundingly during 2014, which helped the KSE-100 index cross the psychological barrier of 32,000 points recently. According to Hashmi, the best-performing stocks (until December 26) were Indus Motor Company (up 159.1%), Murree Brewery Company (151.7%), Pak Suzuki Motor Company (143.6%), Packages (138.8%), Archroma Pakistan (123.3%), Mari Petroleum Company (115.5%), Pioneer Cement (111.3%) and The Searle Company (100.4%). Conventional equity funds performing worse than the benchmark index were JS Growth Fund (22.21%), Atlas Stock Market Fund (21.86%), Askari Equity Fund (21.67%), JS Value Fund (20.99%), Pakistan Strategic Allocation Fund (20.29%), First Habib Stock Fund (16.53%), Crosby Dragon Fund (16.19%) and HBL Stock Fund (15.39%).

2015-2016 (Reaching new heights)

From its all-time high at 36,229 points on Aug 6, 2015, the KSE-100 index had tumbled to 31,298 points by the end of trading session last Friday. It represented a steep drop of 4,931 points or 13.6pc in just the last six months. If the entire market were to have sunk that much, it would be nothing short of a catastrophe. But the KSE index of 100 shares that most investors follow on the Pakistan Stock Exchange (PSX) is skewed towards the sectors that hold the highest weightage. According to the PSX website, the KSE-100 index was introduced in November 1991 with base value of 1,000 points. The index comprises 100 companies out of all listed companies currently at 559. “Those 100 are selected on the basis of sector representation and highest market capitalisation, which tracks over 85pc of the market capitalisation of the companies listed on the Exchange.” The two sectors that currently command the highest weightage in the index include commercial banks with 25pc weight and oil and gas exploration companies having 10pc weight. Together, they represent 35pc of the KSE-100 index. And incidentally both those sectors have come to grief. By the month of June, KSE-100 was in positive conditions and it achieved 38,777 points on 17 June 2016.


The Pakistan Stock Exchange’s (PSX) KSE-100 – a benchmark for market performance – was Asia’s top performing index in 2016, much to the delight of thousands of investors who thought the golden run would continue. After close to 45% return in dollar terms for the average investor in the previous year, fresh money poured in In January 2017, the stock market hit the all-time high of 49,969 points. On 13 February, it stands at 49,876 points Following Britain's decision to leave EU on 24 June, KSE went down by 1,100 points (3.1 percent) as stock markets went in turmoil with investors now investing in safe havens like gold and government bonds 2017 would prove to be a nightmare. Equity-based funds posted negative returns in the range of 10% to 20%, while brokerage houses had to be content with low volumes that put a dent on their earnings. Overall, the KSE-100 Index posted an absolute negative return of 15.34% during the year. In dollar terms, it was a negative return of 20%. The year was the worst one for the PSX since the financial crisis enveloped global equity markets in 2008.

It also meant that the PSX’s performance was the worst in the world, in sharp contrast to global equity markets that outshone most asset classes. On December 29, the last trading day of the year, the PSX benchmark KSE 100 Index ended at 40,471.48 points. This is a drop of 23.45% from its all-time high of 52,874.46 points it touched on May 24 this year. The index even touched 37,919.42 points, a 20.68% fall since January and 28.28% from its all-time high in mid-December. However, a relief rally, sparked by buying in select oversold stocks, was enough to propel the index past 40,000. In terms of numbers, the market capitalisation dropped to $73.5 billion, wiping off $21 billion from the stock market from the all-time high. The value of all shares ended at $77.55 billion as on December 29, 2017, a slight recovery. “This was the worst year for Pakistan equities since 2008 when the market crashed 58% due to the price floor,” Topline Securities’ analyst FahadQasim said in a note on the market year-ender.

Reasons for the downfall

Many analysts and market followers said political instability, which hit its peak following the disqualification of Nawaz Sharif as prime minister, was the root cause behind the bearish run.


is an amount of money that you have to pay to the government

Why do governments collect taxes ?

Every country is run by a Government. Why any Government is at all required?

1-The government collects taxes to pay for the goods and services it provides including schools, roads, law enforcement, libraries, parks and military protection. 2-Taxes are collected to support the government's services to its citizens


2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18


Each one of us, one way or another, is involved in selling something, some people are selling goods and some sell their services. In return, we receive monetary benefit for selling these services and goods. Similarly, Government collect taxes from its citizens to provide them services, goods and even to support those who are unemployed (but that is only if its a welfare state). Taxes are also collected to invest in projects of public benefit, to pay state debts etc.

Federal Board of Revenue ( FBR)

is a top federal government body that investigates crimes related to taxation and money-laundering. The organization collects intelligence on tax evasion and audits cases. It administers tax laws for the Government of Pakistan and acts as the central revenue collection agency of Pakistan.

FBR Tax Collection

(Million Rupees)


620,230 717,602 801,405 955,563 1,144,269 1,202,952 1,377,276 1,556,258 1,894,998 2,023,648 2,305,498

Total Tax Collection

1,008,092 1,161,150 1,327,382 1,558,014 1,882,693 1,946,361 2,254,531 2,589,978 3,112,472 3,367,874 3,842,136

Direct Taxes

387,862 443,548 525,977 602,451 738,424 743,409 877,255 1,033,720 1,217,474 1,344,226 1,536,638


377,430 451,744 516,348 633,357 804,899 842,528 996,382 1,087,790 1,302,371 1,328,965 1,491,297

Indirect Taxes Excise Customs

92,137 117,455 124,784 137,353 122,464 120,964 138,084 162,248 188,055 197,911 205,877 150,663 148,403 160,273 184,853 216,906 239,460 242,810 306,220 404,572 496,772 608,324 Jul-16 Aug-16 Sep-16 Oct-16 50,671 69,080 113,941 88,636 73,060 90,713 97,725 102,993


6,110 9,455 15,492 15,414 28,557 37,755 34,562 34,200 107,727 137,923 147,779 152,607 158,398 207,003 261,720 241,243

Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 81,120 188,047 81,740 80,019 147,242 78,407 117,084 248,239 81,037 131,911 92,627 95,481 132,113 111,476 141,286 178,543 16,680 22,274 10,419 12,463 18,846 16,876 24,996 28,886 37,436 45,468 39,070 37,523 48,800 43,198 47,594 62,609 135,153 199,653 142,116 145,467 199,759 171,550 213,876 270,038 216,273 387,700 223,856 225,486 347,001 249,957 330,960 518,277 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 68,250 83,528 131,080 93,327 98,873 188,476 95,706 89,631 152,524 95,011 125,791 314,441 90,107 97,308 127,000 116,301 107,684 148,110 116,087 111,620 139,510 132,892 152,308 152,370

FY 18

8,361 12,064 18,387 13,494 15,889 21,892 13,498 17,565 23,131 19,081 19,770 22,745 39,890 44,375 44,607 46,459 48,600 57,590 48,206 43,648 55,059 47,682 54,632 77,576 138,358 153,747 189,994 176,254 172,173 227,592 177,791 172,833 217,700 199,655 226,710 252,691 206,608 237,275 321,074 269,581 271,046 416,068 273,497 262,464 370,224 294,666 352,501 567,132

FBR Revenue Collection vis-à-vis Target

FBR has collected Rs.

3,842 billion

during FY 2017-18 against

Rs. 3,368

billion during FY 2016-17 denoting a growth of

around 14.1%.

The growth attained during FY 2017-18 seems encouraging when compared with growth of 8.2% during FY 2016-17. An additional amount of around Rs.474.3 billion has been collected over the collection of previous year

Table 1: A Comparison of Collection 2017-18 vis-a-vis Target

During FY 2017-18 the overall growth in net tax collection has been 14.1% (Table 2). The collection of customs duty with 22.5% growth was on the top, followed by direct taxes with 14.3% and sales tax 12.2%. FED collection remained below the double digit growth The direct taxes are the top source of FBR revenue with 40 percent share, sales tax is the second major source with 39% share. The share of customs duty is gradually increasing and has reached from 10.8% in FY 2013-14 to around 16% in FY 2017-18. The share of direct taxes needs to be increased further to make our taxes more progressive as well as equitable and to further reduce reliance on indirect taxes.

FBR Revenue and Tax-GDP Ratio during Last Five Years

The overall FBR revenue collection during last five years has increased from Rs.2,255 billion in FY 2013-14 to Rs.3,842.1 billion in FY 2017-18. Five year’s average growth has been 14.6 percent (Table 4). The five years average growth in customs duty has been around 21%, followed by direct taxes around 16%, FED (11.4%) and sales tax (12.3%). The tax-GDP ratio of Pakistan is very low as compared to the world standards. Although some progress has been made during last five years but still more efforts are required to enhance

country’s tax-GDP ratio to a reasonable level. During FY 2013-14 FBR’s tax-GDP ratio was 9.0% which has reached to 11.2% in FY 2017-18. The year-wise net collection and tax-GDP ratio is depicted in Graph 4 and 5.

Sales Tax:

During FY 2017-18, sales tax remains second in top revenue generating sources of federal taxes receipts after direct taxes. It constitutes around 39% of the total net revenue collection. Collection during FY 2017-18 has been around Rs. 1,491 billion against around Rs.1,329 billion in the PFY. Overall sales tax collection grew by 12.2% and around Rs. 162 billion of additional amount has been collected during FY 2017-18 as compared to the collection of previous year. The revenue target of sales tax has been met to the extent of around 96% of the assigned target of Rs. 1,547 billion for FY 2017-18. Domestic sales tax collection grew by 8%, whereas collection of sales tax on imports increased by 16%. Details of collection of these two components are shown in Table

Within sales tax, the share of sales tax on imports is around 55% and that of domestic sales tax is around 45% during 2017-18 (Graph 6). This composition is changing and the share of STM is slowly rising as compared to sales tax domestic during last couple of years. The declining share of STD is not a good omen for revenue mobilization efforts. Therefore, the concerned wing needs to review the causes and take necessary measures to enhance STD revenue


The government has missed virtually every main macro-economic target set in the budget 2008-09 for the outgoing fiscal. This includes the projected 5.5 per cent GDP growth, 12 per cent inflation, Rs1,250 billion revenue and per capita income of 1,085 dollars, reveals the Economic Survey for 2008-09 released here by Adviser to Prime Minister on Finance Shaukat Tarin. The survey states that Pakistan’s GDP growth has been estimated at 2 per cent for the current fiscal as against the original 5.5 per cent target, which was then revised to 3.5 per cent and further clipped to 2.5 per cent as agreed with the IMF. Likewise, the inflation target was fixed at 12 per cent by the government in the budget for the current fiscal, which in reality stood at 22.3 per cent in the

first 10 months of 2008-09. “Per capita income in dollar terms rose from the finalised figure of $1,042 last year to $1,046 in 2008-09, showing a marginal increase of 0.3 per cent.” However, in last year’s Economic Survey the target of per capita income was $1,085, which has come down to $1,042. The revenue target was fixed in the budget at Rs1,250 billion and was irrationally revised upward by the government to Rs1,360 billion, then revised downwards to Rs1,300 billion and yet again reduced to Rs1,180 billion, which also seems impossible to achieve

A New Measure of Core Inflation

A new method of permanently excluding relatively volatile commodities from CPI basket in Pakistan has been developed by SBP. This is achieved by making use of trimming approach on past data on monthly CPI changes to isolate a Relatively Stable Component of CPI (RSC-CPI) as a new measure of core inflation. This method ensures inclusion of both food and non-food commodities that show persistent price behavior in Pakistan (see technical notes for details).

Developments in core inflation measured by RSC- CPI for the month of April 2018