growth help reduce poverty in conjunction with investment in social sectors, targeted interventions and social safety nets. structural reforms are needed to strengthen the underpinning of macroeconomic policies and to remove microeconomic distortions affecting key sectors of the economy thus paving the way for accelerating economic growth. improved governance affects the quality of growth by allowing realization of higher returns on investment and is also conducive to poverty reduction through better delivery of social services to the poor. poverty reduction, as we know by now, can be achieved with rapid economic growth, structural reforms and improved governance. macroeconomic stability macroeconomic stability has been achieved through reduction in fiscal deficit, acquiring a surplus on the current account balance of payments, lowering of inflation, and a transformation of external debt profile. these have been brought about partially through the support of international financial institutions and the paris club bilateral creditors which significantly eased the external payments position that had been a major and consistent risk to the economy since 1998. fiscal deficit was reduced by pursuing a combination of four set of policy measures ( i ) mobilizing additional tax revenues ( ii ) reducing subsidies to public enterprises and corporations and ( iii ) bringing about a significant decline in debt servicing payments and ( iv ) containing defence expenditures. monetary policy was kept reasonably tight during the first two years with money supply growth at about 9 percent. expansion in private sector credit, in the subsequent years, did not put much pressure as the government borrowing was limited to a manageable level. as the monetary conditions improved the interest rate came down gradually to a single digit and demand for credit by the private businesses picked up resulting in higher capacity utilization in manufacturing and increased industrial production. external debt management focused on ( a ) reprofiling of the stock of official bilateral debt, ( b ) substituting concessional loans for non - concessional from international financial institutions, ( c ) pre - paying expensive loans and ( d ) liquidating short term liabilities. debt ratio was thus reduced from 100 percent of gdp to 60 percent in five years time. trade policy in pakistan has been categorized by the world bank as one of the least restrictive in s. asia along with sri lanka and this policy has gradually provided incentives to exporters to increase their market share in the global markets. exchange rate policy was pursued to maintain stability in the foreign exchange markets while at the same time keeping the competitiveness of pakistani exports intact. large accumulation of foreign reserves played an important role in stabilizing the exchange rate. structural reforms tax reform tax reforms

at subsidiary level ( host ) are addressed ; and the choice between subsidiaries or branches, together with the supervisory powers of host national competent authorities ( ncas ). in this context, the transformation of subsidiaries into branches has emerged as an answer to the host responsibility for covered deposits – however that implies, at least, when local undertakings are of systemic relevance to the concerned member state, that : domestic supervisors should have a say in the day - to - day supervision and should have the capacity to react to strategic decisions affecting branches as they would have had 1 / 2 bis central bankers'speeches had it been a standalone entity ; national resolution authorities are adequately involved and empowered in the definition of resolution plans and in the resolution action when it occurs. 2. second, solutions need to be found for the orderly exit of traditional medium - sized deposittaking banks without disrupting financial stability. whereas mrel and bail - in requirements may work for larger banks, there may be no clear room for a ‘ middle class ’ of institutions whose business model may be incompatible with mrel requirements ; institutions that may be of no public interest at eu level but still have systemic relevance at local level. instead of moving immediately towards a further straitjacketing of member states ’ room for manoeuvre with the harmonisation of eu banks ’ liquidation regimes, efforts must be made towards the establishment of an enabling framework for the “ orderly ” winding - down of locally systemic relevant banks, combining elements of the resolution and liquidation frameworks, while preserving value and protecting creditors and non - financial borrowers. possible paths to be explored might include : the establishment of special insolvency proceedings, with recourse to administrative options, attributing some of the instruments currently envisaged in the brrd for banks in resolution to a liquidating authority, as an alternative to the ‘ atomistic ’ court - led liquidation regime. ( the liquidating authority and the funding sources available would need to be identified. ) ensure effective financing of the deposit insurance systems for deposit transfers abiding by the least cost principle with the liquidating authority having the option to offer guarantees or enter into profit and loss sharing regimes. ( for that, a revision of the applicable state aid rules would be required. ) recent calls to form a sort of european fdic, merging the single resolution fund and edis into one single entity, merit our attention in this regard in the medium - term, provided that the legal framework is fixed and that financial stability