Pakistan Economic Stimulus Package

Pakistan economic stimulus package is required to be examined very carefully. In October 2008 inflation in Pakistan touched 30%, and their national currency rupee was devalued by 25%. Fiscal deficit was 10% of GDP and foreign exchange reserves were just enough to sustain imports for about six weeks.

It required at least $3 billion in short run and a further $10 billion to fill in balance of payment gaps. Matters were worsened by terrorist attacks on Islamabad Marriott Hotel when IMF delegates were on a visit to Pakistan. All these factors make an economic stimulus package to Pakistan even more necessary than before.

IMF support could act as an economic stimulus package for Pakistan. It is expected to come with enough pre-conditions specifically at cost of budget outlay on defense and development. Economic stimulus of Pakistan in form of alternative aid could be arranged from Saudi Arabia in form of deferred long-term payment for oil. Syed Naveed Qamar, in order to provide Pakistani economic stimulus package to national economy, has withdrawn subsidy on fuel gas, and would remove subsidy on electricity from June 2009 onwards. Gross domestic product (GDP) is expected to grow at 4.7% in 2009-10 as compared to 4.2% in 2008-09. Pakistan economic revival process, initiated by their finance minister in September 2008, was essentially designed to raise foreign exchange reserves.

Pakistan economy is expected to be dependent on textiles and services and primarily be driven by private investments and consumption. Monetary policy is directed towards controlling inflationary pressures. A widening gap between services and trade revenues is, to a considerable extent, countered by growth in foreign remittances. Compared to last five years, depreciation of Pakistan rupee is expected to take place with respect to US dollar.

Since October 2008 Pakistan has been asking for financial assistance from International Monetary Fund in order to keep its economy afloat. These requests have come from higher levels of Pakistani governance. They had asked for an audience from International Monetary Fund in order to find out ways to address critical financial issues in Pakistan. Prices of important items like oil and food have gone up thus signaling a critical phase in Pakistani economy.

Pakistan - Fast Facts

Pakistan is a Lower income economies coming under the South Asian region as to the classification made by the World Bank on the basis of income and region for the year 2006.

Pakistan is an agricultural based economy by employing more than 50 % of the country's labor force and constitutes more than 25% of the GDP. The industrial sector is also performing better in the recent years.

Major agricultural products in the country are maize, sugar cane, rice, wheat, milk, mutton, eggs and cotton. Important industries in the country are food processing, textiles, chemicals, clothing and paper products. The economy also gets major revenues from the exports of cotton, rice, leather and carpets.