World Bank2014-04-152014-04-152014-04https://hdl.handle.net/10986/17788Pakistan's economy is weak but at a turning point. Growth recovery is underway, with the projected GDP growth approaching 3.6-4.0 percent, driven by dynamic manufacturing and service sectors, better energy availability, and early revival of investor confidence. Inflation is steady at 7.9 percent (y-o-y). The fiscal deficit is contained at around 6 percent of GDP due to improved tax collection and restricted current and development expenditure. The current account deficit remains modest, at around 1 percent of GDP, supported by strong remittances and export dynamism, and the external position is slowly improving since monetary and exchange rate policies switched gear toward rebuilding reserves last November. Performance under the IMF program remains satisfactory, with the 2nd Review concluded on March 24. Domestic and external risks, however, remain high, but are declining. Economic activity is gradually improving. Preliminary data for FY14 show growth picking up, driven mainly by services and manufacturing. A significant correction of a loose fiscal stance is taking place to ensure sustainability. Pakistan is on track to meet a fiscal deficit target of 5.8 percent of GDP in FY14. The external position is fragile but strengthening. The current account deficit was small, at around 1 percent of GDP by end-FY13 and remains so. In contrast, net official foreign exchange reserves declined to the equivalent of 1.3 months of imports at the end of June 2013 (bottoming down to 0.6 month of imports by the end of November 2013). Three sources of risk appear worrisome. Pakistan imports more than it exports, the latter being constrained by low productivity and competitiveness, limited access to reliable energy, and cumbersome business regulations.en-USCC BY 3.0 IGOACCESS TO INFORMATIONACCOUNTINGAGGREGATE DEMANDAGRICULTURAL COMMODITYARREARSASSET PORTFOLIOAUCTIONAUCTIONSAUDITSBALANCE OF PAYMENTSBALANCE SHEETBANK ACCOUNTSBANK BORROWINGBANK BORROWINGSBANK DEBTBANKING SECTORBANKING SYSTEMBASIS POINTSBENEFICIARIESBLUE CHIPBONDBOND INDEXBONDSBOOST TO GROWTHBROAD MONEYBUDGETARY DEFICITBUDGETARY SUPPORTBUSINESS REGULATIONSCAPITAL ACCOUNTCAPITAL ADEQUACYCAPITAL GAINSCAPITAL MARKETCAPITAL MARKET REFORMSCASH TRANSFERSCENTRAL BANKCOMMERCIAL BANKSCOMMODITIESCOMMODITY PRICESCONSUMER SPENDINGCONTINGENT LIABILITIESCORPORATE GOVERNANCECORPORATE GOVERNANCE STANDARDSCOUNTRY RISKCREDIT BUREAUCREDIT INFORMATIONCREDITORSCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITDEBTDEBT REPAYMENTSDEBT SERVICEDEPOSITSDEVELOPMENT BANKDIRECT INVESTMENTDISBURSEMENTDISBURSEMENTSDOMESTIC BORROWINGDOMESTIC DEBTDOMESTIC INTEREST RATESDOMESTIC SECURITIESECONOMIC ACTIVITYECONOMIC DEVELOPMENTSECONOMIC GROWTHECONOMIC REFORMEMERGING MARKETSEQUITY MARKETEUROBONDEXCHANGE COMMISSIONEXCHANGE RATEEXPENDITUREEXPENDITURESEXPORT GROWTHEXPORTERSEXPOSUREEXTERNAL DEBTEXTERNAL FINANCINGFARMERSFEDERAL GRANTSFEDERAL TAXESFINANCIAL FLOWSFINANCIAL HEALTHFINANCIAL INFLOWSFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SECTOR DEVELOPMENTSFINANCIAL SERVICESFINANCING NEEDSFISCAL BURDENFISCAL CONSOLIDATIONFISCAL DEFICITFISCAL DEFICITSFISCAL DISCIPLINEFIXED RATEFLOATING DEBTFOREIGN ASSETFOREIGN ASSETSFOREIGN DEBTFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN INVESTMENTFOREIGN PORTFOLIOFOREIGN PORTFOLIO INVESTMENTFREE ACCESSFREE TRADEFREE TRADE AGREEMENTGOVERNANCE ISSUESGOVERNANCE STANDARDSGOVERNMENT BORROWINGGOVERNMENT BORROWINGSGOVERNMENT PAPERSGOVERNMENT SECURITIESGROWTH RATESINCOMEINFLATIONINFLATION RATESINFLATIONARY EXPECTATIONSINFLATIONARY PRESSURESINSTITUTIONAL INVESTORSINSURANCEINTEREST PAYMENTSINTEREST RATEINTEREST RATE CHANGESINTEREST RATE RISKINTEREST RATESINTERNAL CONTROLSINTERNATIONAL BEST PRACTICESINTERNATIONAL BUSINESSINTERNATIONAL MARKETINTERNATIONAL MARKETSINTERNATIONAL TRADEINVESTINGINVESTOR CONFIDENCEISSUANCELEVEL PLAYING FIELDLEVYLIFE INSURANCELIMITED ACCESSLOANLOAN PORTFOLIOLOAN SIZEMACROECONOMIC STABILITYMARKET CAPITALIZATIONMARKET CONFIDENCEMARKET DIVERSIFICATIONMARKET LIQUIDITYMATURITIESMATURITYMICRO INSURANCEMICROFINANCEMICROFINANCE SECTORMONETARY FINANCINGMONETARY FUNDNON-PERFORMING LOANSNPLOIL PRICESOUTPUTPORTFOLIOPORTFOLIO INVESTMENTPRIVATE CREDITPRIVATE INVESTMENTPRIVATE SECTOR CREDITPRIVATIZATIONPRIVATIZATIONSPRODUCTION CAPACITYPUBLIC DEBTPUBLIC INVESTMENTPUBLIC OFFERINGSPUT OPTIONREAL ESTATERECURRENT EXPENDITUREREFORM PROGRAMREGISTRATION PROCESSREGISTRATION SYSTEMREGULATORREGULATORY FRAMEWORKREMITTANCEREMITTANCESREPAYMENTREPAYMENTSRESERVERESERVESRETURNRETURN ON ASSETSRETURNSRISE IN INFLATIONRISK OF DEBTSAFETY NETSSAVINGSSETTLEMENTSHORT-TERM INSTRUMENTSSOCIAL SAFETY NETSSOLVENCYSPOT MARKETSTATE BANKSTOCK EXCHANGESTOCK MARKETSTOCK MARKET CAPITALIZATIONSTOCK MARKETSSTRUCTURAL PROBLEMSSUPPLY CHAINSUSTAINABILITY ANALYSISSUSTAINABLE REFORMST-BILLSTAXTAX COLLECTIONTAX EXEMPTIONSTAX OBLIGATIONSTAX POLICYTAX RATESTAX RETURNSTAX SYSTEMTELECOMMUNICATIONSTOTAL DEBTTRADE BALANCETRADE DEFICITTRADE RELATIONSTRADE SECTORTRADINGTRANCHETRANSPARENCYTREASURYTREASURY BILLSTRUST FUNDTURNOVERUNIONVARIABLE RATESWEAK CORPORATE GOVERNANCEWITHHOLDING TAX10.1596/17788