Thursday, February 4, 2010

Pakistani Government Selling $1 billion of bonds to Combat Increasing Budget Deficit

Shamim Adam has written a nice report in Bloomberg: Pakistan May Sell as Much as $1 Billion of Bonds. The report will give you a general idea of the current condition of Pakistani economy. Pakistan is suffering from many problems. Increasing budget deficit is becoming a major cause of concern because the deficit is around 5% OF GDP. GDP growth is slower compared to its two giant neighbors India and China. Internal security concerns and war on terrorism in tribal areas have also become very expensive for the government. Security concern is also a major obstacle when it comes to attracting foreign investment. So, selling bonds and government assets seems to be the wise thing to do at this moment.
One good part of Pakistani economy is that its foreign exchange reserve is growing and by the end of this year, this reserve may reach to $20 billion. This is a healthy amount and it will perhaps help the country not to get too much dependent on IMF.  
Inflation is a big problem for the people and in the current fiscal year, there is no respite from this problem. 

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