IMF Staff Country Reports

This paper reviews economic developments in Pakistan during 1990–95. The authorities succeeded in reducing the budget deficit and in slowing down the growth of the net domestic assets of the banking system in 1993/94. These tighter financial policies led to a marked reduction in the macroeconomic imbalances that had flared up in 1992/93; in particular, they were reflected in a much narrower external current account deficit. Moreover, the strong stance of demand management contributed to a turnaround in private sector confidence, which was evidenced by large capital inflows.