way we could repay such huge amount of money out of our foreign exchange earnings. this amounted to 60 to 70 percent of foreign exchange earnings including the sbp purchases from kerb market. we made all possible efforts to ensure that no payments to foreign portfolio investors or foreign companies such as hubco were stopped so that the country ’ s credibility which was very low at the time could be restored. credibility had to improve as we were engaged in public dispute with ipps and foreign investors were shying away for this and other reasons. our worst critics also admit that pakistan ’ s standing in international financial markets has improved quite significantly and our sovereign ratings are gradually moving upwards. to improve debt sustainability the following actual cash payments were made by sbp on account of external debt servicing during the last three years. rs. billion 1999 - 2000 3. 756 2000 - 2001 5. 101 2001 - 2002 6. 327 15. 184 these amounts include retirement of $ 4. 5 billion of commercial and short term debt and other foreign currency liabilities. these payments were possible because of purchases of workers remittances through the kerb market in the first two years and heavy inflow since september 11, 2001. we were able to manage debt servicing in an orderly manner because the following amounts due on debt servicing to paris club and other creditors of rs. 9. 1 billion were rescheduled. rs. billion 1999 - 2000 4. 081 2000 - 2001 2. 795 2001 - 2002 2. 243 9. 119 this strategy of debt reprofiling of paris club debt over a period of next 38 years, early and pre - payments of commercial and short term debt and substitution of soft term loans by international financial institutions for hard term loans has gradually led to lowering of our external debt indicators. we are committed to retiring non - concessional loans of world bank, asian development bank and imf before time. the new loans from these institutions are all concessional in nature – zero interest rate, 10 year grace period and 30 years repayment. if the current trends persist we expect that external debt servicing ratio which has already come down to 40 percent will further decline to 25 percent of our foreign exchange earnings. this is a level where we will feel comfortable, as we will be able to meet these obligations from the country ’ s own resources without recourse to exceptional balance of payments financing from international financial institutions. i must also submit that the period of stabilization has taken longer than we had originally envisaged

question of “ access. ” direct intervention to build financially inclusive system is critical as one recognizes fully ( i ) financial markets failures and imperfections such as information asymmetries, lack of sensitivity to gender and redistributive dimensions of resources and wealth and high transaction costs etc. ; ( ii ) high price and non - price barriers such as lack of credit history and collateral and connection ; and ( iii ) other constraints such as lack of literacy and entrepreneurial skills, etc. 4. over the years, there has been substantive development in the architecture and thinking on financial inclusion. while there is no “ one - size fits all ” financial inclusion strategy or approach but it is important to recognize few core or necessary and sufficient conditions that are needed to maximize the benefits derived from such strategy. 5. at the outset, it is critical to understand the size and dimension of financial exclusion. despite complexities of estimation, a recent study 3 concluded that average level of financial an alternative definition of poverty ( $ 2 a day ) gives an estimate of 2 billion poor in asia. however, for monitoring progress of mdgs, world bank uses the $ 1 / day definition as it reflects extreme poverty. the world bank, global monitoring report, 2007. beck, thorsten, asli demirgc - kunt, and maria soledad martinez peria ( 2007 ) " reaching out : access to and use of banking services across countries. " journal of financial economics 85 ( 1 ). exclusion, as measured by the percentage of the adult population with access to an account with a financial intermediary, in poor developing countries is as high as the level of financial inclusion in advanced industrialized countries where it is rare not to have at least some access to basic financial services in remote parts. in developing countries, level of financial exclusion is steepest in sub - saharan africa ( a reflection of extreme poverty and difficult economic condition ). situation in asia, present a mixed picture. south asia ( average access rate being 31 percent ) lags behind in expanding financial access relative to south east asia ( average access rate being 47 percent ). advanced transition economies of central europe have progressed well in rebuilding access. there has been relatively little progress made in central and south america despite a relatively robust economic base, particularly among larger countries. 6. to design strategy and policies, there is further need to understand what the reasons for exclusion are? is it voluntary or pure denial of services and what the barriers of access to finance are