Following the advice of IMF, the Government moved to a floating exchange rate regime in September 2000. The Pakistan rupee was allowed to depreciate 12 percent against the US dollar and remained relatively stable. This vulnerable foreign exchange position is a major concern of the Government. An IMF arrangement with the Government in November 2000 enabled other multilateral development banks to resume lending to Pakistan. Improving the quality of governance is a precondition for success of the reforms, and for sustainable development.
Poverty reduction is another area of concern.
Using the caloric definition, poverty is estimated by the Government at 30 percent. In 2000, the main focus of the Government s fiscal reforms was improving revenue collection by broadening the tax base and strengthening tax administration. In the financial sector, detailed privatization plans have been drafted, and disposal of the remaining shares of national commercial banks and other state-owned financial institutions is proceeding. With help mainly from ADB, the Government has introduced major capital market reforms, including establishing a national clearing and settlement system, automating stock exchange transactions, and establishing credit rating agencies for strengthened information flows and market efficiency. The pace of privatization has accelerated recently.