would add $ 350 million to the country ’ s foreign exchange reserves. the adb has so far provided $ 333 million. the country has been able to reschedule $ 2. 8 billion which it had to pay to external creditors this year. despite this relief, it maybe pertinent to mention that the country still had to pay $ 4 billion in cash foreign exchange out of its own resources to service its external debt. the pakistan development forum gave a resounding endorsement to the reforms pakistan is undertaking. credit rating of pakistan has improved. overall, there is a perceptible and positive change in pakistan ’ s standing with the international financial community. this is, therefore, the genesis for the improved perception of external donors about pakistan ’ s economy. in addition to the imf program implementation there are some key reforms this government has embarked on its own – survey and documentation of the economy to widen the tax net and improve tax compliance, devolution of power to the grass root level whereby the common people are empowered and the old bureaucratic system is dismantled ; accountability of those who had looted national wealth in the past ; recovery of bank loans from defaulters, utility bills and evaded taxes. these measures, on the top of others implemented as part of the imf program, have created their own dynamics and shaken the foundations of the rent seeking culture prevalent in the economy for such a long time. but the sad part is that the rent seekers, who were keeping the overall economy buoyant have withdrawn from the scene. consumption expenditures emanating from the rent - seeking class are much lower than what they used to be in the past. their investment activities have come to a halt. most of them are trying to find safe havens abroad for their wealth. while the group of external donors is pleased that the country had taken all the tough decisions which were postponed by the previous governments for such a long time the same decisions and other measures adopted by the government, have created hardships domestically for several classes of economic agents. what were the expectations of the various domestic classes? it may be pertinent to recall that the expectations from the present government were quite high as the country had faced an atmosphere of uncertainty and despondency for a long time and the military was considered as a savior of the economy. the urban educated unemployed felt that new employment opportunities will be created to absorb them. the fixed income groups thought that the wages, salaries and pensions frozen since 1994 will be raised

easy to establish firewalls and protect banks from risks arising out of non - banking activities. while banks will not be able to directly benefit from any profits of their non bank companies, the overall group will be strengthened. ( iv ) the sponsor shareholding of banking as well as non banking companies will become transparent and help sbp in ensuring that these institutions operate at arm ’ s length. the majority shareholding in a bank will be channeled through the fhc, and since under the proposed amendments, fhc supervision is with sbp, the shareholdings can be more closely monitored. ( v ) the structure provides organic growth without increasing contagion risk as it is very unlikely that the whole group will fail. in order to facilitate the fhc model, we are also seeking several amendments in the bco covering its definition, licensing and supervision ( which will be by sbp ), capital requirement and various other aspects. in anticipation of these legal changes, sbp is also preparing supportive regulations to aid the effective development of financial conglomeration and their oversight. in conclusion, the proposed legal and regulatory changes, discussed above, to strengthen the oversight of the financial sector, are an integral element of the ten year strategy and blueprint of financial sector reforms prepared by the central bank. concurrently, sbp has also launched wide ranging reforms including capital augmentation of banks, shift to riskbased supervisory approaches, and proper implementation of basel ii. the private sector has responded well to sbp ’ s initiatives and a number of banks are launching work to take benefit of the emerging legal and regulatory changes to position their financial institutions better to compete in a more aggressive regional and global environment.