The official currency of Pakistan is the rupee (PKR). One rupee consists of 100 paise (singular = paisa). When Pakistan began printing its own currency in 1948, they used Indian currency with "Pakistan" stamped on it for the first few months until enough of the Pakistani notes were in circulation. Until 1961, the rupee was divided into 16 Annas before being changed to 100 paise. From the time of the rupee's introduction until the turn of the 21 st century, it steadily declined in value against the U.S. dollar. Then, Pakistan's large current-account surplus drove up the value of the rupee until the government lowered interest rates and bought dollars to stabilize the currencies value and maintain its export competitiveness.
| Moody's Rating |
| B2 |
| S&P Rating |
| B |
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Sovereign credit ratings play an important part in determining a country's access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.
What does it look like?
Political Structure
The Federal Republic of Pakistan is divided into four provinces, one territory, and one capital territory. In 1999, following a military takeover, Chief of Army Staff and Chairman of the Joint Chiefs of Staff Committee, General Pervez Musharraf, suspended Pakistan's constitution and assumed the additional title of Chief Executive. The title of the former head of government, the President, was left in tact as a ceremonial chief of state with no governing power. The Chief Executive appoints an eight-member National Security Council to function as the supreme governing body of Pakistan. The judiciary in Pakistan is the Federal Islamic Court.
Prominent Figures
The current Chief Executive of Pakistan is Pervez Musharraf who is serving an indefinite term in office. The central bank of Pakistan is the State Bank of Pakistan. The governor of the bank is Shamshad Akthar.
Unique Characteristics
Public sector deficits of six percent of GDP are typical and these crowd out private investment and build up a large public debt, which is now a major burden to service. Weak investment in the industrial sector and in agriculture inhibits productivity growth and competitiveness, the current account is chronically in deficit and international reserve levels are very low. Fueled by high oil prices, as well as higher levels of capital goods imports, Pakistan's trade deficit rose to $4.262 billion during the period of July 2004 - March 2005. Pakistan annually imports around eight million tons of crude oil. It is stated that, "the economies of Asia, like those of most developing countries are oil intensive. In other words, Asians consume more oil per unit of output than Europeans or even gas-guzzling Americans."
Key Economic Factors
Pakistan has had a difficult time economically and politically over the past decade. The IMF has established several reform and economic adjustment programs for the country, but domestic political weakness and division have made effective reform elusive. While average annual GDP growth has hovered around four percent, Pakistan's potential growth rate is probably closer to six percent if it could achieve macroeconomic and political stability. Poor tax collection and administration infrastructure kept the government budget perpetually in deficit and limited the public sector's ability to fund infrastructure development and basic social services. And, defense spending absorbed a high share of government resources that were available.
The major turning point in Pakistan's fortunes regarding international assistance came in the last quarter of 2001 when the US-led war on terrorism fought its first battle in neighboring Afghanistan. The Musharraf government elected, at no little domestic political risk to its future, to cooperate with the United States and was fortunate to have the first major phase of the war next door end with a new Afghan government it can live and work with and with the gratitude of the United States well-earned. Prospects for aid and debt relief are much improved and progress is already being made that will reduce Pakistan's international debt burden.
Although agriculture is declining as a percentage of total output, this sector remains the primary economic activity in Pakistan. Cotton, wheat, rice and sugarcane are the primary crops, which benefit from an extensive irrigation system. The annual cotton crop is of particular importance as it provides the input to the textile and garment industry, which is the nation's dominant export industry. Pakistan is attempting to increase its information technology sector, but only three percent of the populace has telephones at home. Having achieved a degree of self-sufficiency in the armaments sector, Pakistan is now promoting arms sales as a means of generating more diversified export revenue.
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