2. 3 and remittances which reached $ 5. 5 billion. these flows combined with pakistan ’ s decision to float sovereign bond issues and gdrs for some companies helped to build the reserves significantly that reached record highs of $ 16. 4 billion. building up of reserves was a decision taken in anticipation of the emerging difficult domestic and external environment. it turns out that this served well in preserving the exceptional shocks pakistan faced in 2007. the severity of the shocks pakistan has faced in recent months has been complicated by the multi - dimensional nature of these shocks. economy has had to deal with series of adverse events on the domestic front for instance, episodes of terrorism, which hit political leaders and businesses, and protracted the political transition process. consequently, this to some extent resulted in postponement of investment decisions ( though these are expected to come on line with the new government now in place ). at the same time there has been pressure on spending, among others stemming from the need to build up security and conduct election. while grappling with domestic shocks, pakistan, like other developing countries, is dealing with the impact of unprecedented hike in global commodity prices which have induced fresh vulnerabilities in the balance of payments and fiscal deficit segments of the economy. these complications could magnify vulnerabilities since the after affects of financial market turmoil is still unfolding even though the present slow down in advanced economies is already impacting demand for asian exports including pakistani exports. a few important development challenges pakistan faces today are : ( i ) restoring macroeconomic stability both by taking some short term measures and launching work to develop a coherent macroeconomic framework for the medium term. immediately after coming into power, the government has taken some concrete actions to reduce the bulge in fiscal deficit ; admittedly more will have to follow. the actions range from pass through of the price increase of strategic products like wheat and oil products and government ’ s belt tightening through reduction in recurrent expenditures and postponement of non - priority development expenditures. ( ii ) reducing inflationary pressures, while a challenge, as government allows more and more pass - through of the global commodity prices, is warranted given that it has been rising continuously and have crossed double digits. in this context, improving availability of products, using utility stores to provide goods at proper prices and ensuring proper availability through appropriate involvement of provincial and district administration are some of the measures being taken. alongside, the government has improved the pricing for procurement of wheat to

in tax revenues, lower fiscal deficit, and a significant reduction in direct fiscal borrowings from state bank of pakistan. state bank of pakistan overall, the improvement in economic environment has supported the revival in real private investment and gradual recovery in economic activity with well anchored inflation expectations. in light of this consolidation, and factoring in an improved security situation, the future for pakistan is very encouraging. backed by concrete reforms, i am confident that real gdp growth – which has shown improvement in the last three years already – is poised to continue on an upward trajectory. ladies and gentlemen, before we move on, i would like to take this opportunity to acknowledge and congratulate the prime minister, mian muhammad nawaz sharif, who mandated, took tough political decision, and spent his political capital for the success of the imf program. i would also like to acknowledge finance minister, senator mohammad ishaq dar, who led and coordinated the program with relentless energy and deep acumen, while providing space and support to the central bank to strengthen institutional credibility. here, i also wish to recognize the commitment, professional standards and technical expertise of the imf team, under the able guidance of mission chiefs, mr. harald finger and mr. jeff frank. indeed, they deserve special accolades. i have fond memories of long hours of tough discussions and negotiations. there are other members of pakistani team who actively supported and worked hard, but, due to paucity of time, cannot be named here. i, however, cannot resist naming a few whose contribution to the success of this program remains remarkable. these are finance secretary, dr. waqar masood khan ; current and former chairmen of fbr, mr. state bank of pakistan nisar muhammad khan and mr. tariq bajwa ; and chairman privatization commission, mr. muhammad zubair. last but not the least my own staff and the able members of our independent monetary policy committee. two final points before i conclude. first, for reforms to take place, the timing and the sequencing matter. in this program, perhaps in more than any other programs in the past, these two factors were taken into consideration and probably these strategically contributed much to reaching the finish line as much as to actually implementing the innovative changes themselves. much remains to be done. second, there is a specific reason why i thanked many personalities moments ago. it is that the power of a shared - goal, which we achieved on this occasion, and the productive syner