of the budgets of federal or provincial governments. as a matter of fact there are three types of expenditures that are incurred. first is the public expenditure, second is the expenditures by private and nongovernmental sectors who provide schooling or health services and finally is the expenditures incurred by the households themselves in form of tuition fees, text books, purchase of medicines, vaccines etc. when all three types of expenditures are taken together we get a complete picture of the expenditures on inputs used for achieving mdgs. in addition to mdgs pakistan has developed the poverty reduction strategy ( prsp ) and more recently an ambitious medium term development framework ( mtdf ) to catch up in the other areas of human development such as secondary, vocational and technical training, higher education, science and technology teacher training, curative health services etc. too much preoccupation and the swing of pendulum towards an exclusive focus on primary education and basic health services create its own distortions and disequilibria. teachers at the primary level exhibit poor quality and performance despite many attempts at teacher ’ s training because their graduate and postgraduate education has been sub - optimal. universities are producing hundreds of thousands of graduates every year who are not all suited for ready absorption in labor market while economy is starving from a lack of technical skills. we have aspirations to become an active player in the globalized economy but capacity has to be developed in our science and technology institutions to generate the products, innovations and processes that will improve the productivity. the linkage between industry and universities is almost non - existent at present and has to be nurtured. the main argument of this paper is that while the donor emphasis and pakistan ’ s commitment to achieve mdgs are well placed and should be fully implemented a more holistic approach towards human resource development that caters both to the economic and social objectives of the country has to be adopted. the internalization of externalities, spillovers and linkages within the whole human development initiative would create efficiency and result in cost savings and thus reduced overall financing needs. second, “ all hands on the deck ” covering the federal, provincial and local governments, private sector, external donors, communities, not - forprofit institutions, civil society organizations, philanthropies and charities should be assigned roles in a more cohesive and integrated manner. the waste, duplication, overlapping can be avoided and optimal use of physical facilities and infrastructure by multiple players and pooling of resources across institutions rather than maintaining separate silos

( reflecting global macro imbalances ), “ carry trade ” and currency misalignments. although, monetary conditions had begun to tighten, the sub - prime mortgage crisis caused liquidity squeeze that resulted in loss of confidence and panic among investors and lenders ( and now central banks ) as they could not offload the complex risky assets and structured financial products. since banks turned to rescue and bought off chunks of these papers, with low mark - to market valuations these resulted in losses to a number of financial institutions and write offs required capital injections. this fortunately was possible given the growth in sovereign funds which are waiting for acquisition and other deals. could it be possible that by accommodating the oil and food prices and ( attempting ) to revive the economy, us is setting the stage for another round of easy monetary policy and liquidity situation. in my opinion, the key issue for central banks is to differentiate between need for short - term liquidity to rescue troubled financial entities and need for adoption of a credible monetary policy stance which aims to calibrate liquidity management in a way that it does not aggravate inflationary risks which in turn would trigger further complication and protract the global economic recovery. while lowering interest rates, central banks have to weigh inflationary risks against the risk of recession and financial instability. in bailing financial entities, the central banks have to be concerned with “ moral hazard ” associated with such policy response as it often encourage more risky endeavors by salvaging institutions whose sole purpose of existence is risk taking and profit making. not only is pakistan facing different sets of complex challenges, but the emerging global economic scenario itself underscores that country does not mimic the policy response of advanced economies. advanced countries that are selectively lowering interest rates are those that have enjoyed low inflation for sometime but are now facing steeper risks of downturn. as such, there trade off for growth supportive policies relative to inflation is understandable as risks associated with us slowdown would threaten global economic outlook and financial vulnerabilities. pakistan on the other hand has relatively stable financial system, but mounting aggregate demand pressures are now visible in rising inflation and rising inflationary expectations. tightening of monetary stance and flexible exchange rate management are the two key central bank policy responses. these however will have more distinct impact if the government reverts to fiscal prudence and efforts to this count are visible through recent reduction in oil and other subsidies. turning to the domestic front structural reforms :