R
a
n
k
=
1
L
o
w
e
s
t
R
a
n
k
1
8
5
Getting
Electricity
Paying
Taxes
Enforcing
Contracts
Registering
Property
Startinga
Business
Trading
Across
Borders
Resolving
Insolvency
Getting
Credit
Protecting
Investors
Construction
Permits
Figure A8. 1. South Asia Doing Business Rankings
Figure A8. 2. Pakistan Ranking Across Doing Business
50
ANNEX 9. FINANCIAL INCLUSION IN PAKISTAN
Pakistans banking sector continues to be relatively robust and stable, despite difficult macro-
economic situation, devastating floods in 2010 and 2011, law and order and power shortage issues.
Overall, the banking system has consistently remained profitable, with the most recent profit before tax
increasing 22% year-on-year, while both return on assets and return on equity remained at satisfactory
levels with 2.2% and 23.4% respectively. Banking system liquidity has been improving, and solvency
has been strong with the overall capital adequacy ratio of 16%, well above the regulatory requirement of
10%. Banking supervision is relatively strong and independent, and is largely compliant with the Basle
Core Principles. Overall, stress tests show that the banking sector remains reasonably resilient to
extensive shocks and after-shock capital adequacy of the system remains above the minimum
requirement. While overall the banking sector has been robust and resilient in recent years, there remain
some vulnerabilities and gaps--notably in the areas of credit quality, deposit insurance, and oversight of
financial conglomerates. In addition, there is a need to address lack of access to financial services for
most of the Pakistani population. Less than 14% of the population has access to any financial service,
microfinance reaches less than 3% of the population, and less than 7% of SMEs use formal finance for
working capital or investments. Although availability of financial products and services has become
gradually more widespread, access to finance continues to be limited, especially on the credit front.
Overall credit growth has been declining and rising NPL ratios have reinforced banks risk-aversion
towards the private sector. Additionally, the microfinance sector in Pakistan is amongst the most
progressive and innovative globally, but outreach to the poor and underserved remains static, with less
than 3% of the population having access to microfinance products or services. There are even more
serious issues facing women borrowers, including discriminatory lending policies and practices.
One of the most productive actions to enhance financial intermediation for the private sector could
focus on reducing underlying risks by strengthening creditors rights through regulatory reforms
in Secured Transactions and Credit Information. In addition, a special focus on SMEs and on women
is needed if the financial sector is to deepen and broaden access to a range of financial services for these
key constituencies. While all stakeholders are working towards the same goal of bring a more inclusive,
innovative, and sustainable financial sector, which also reaches the poor, the underserved, and SMEs,
there is room for a more cohesive and coordinated approach. Towards this end, a Financial Inclusion
Strategy could bring about a more comprehensive approach, which could maximize the potential
complementarities of all stakeholders, increase and leverage efficiencies and relative comparative
advantages of all players, and provide a roadmap for donors, the private sector, and regulators in
continuing to support and nurture the financial inclusion agenda.
Giving consumers access to their own credit information is one of the key input measures of Doing
Business Getting Credit indicators. And is a critical component in the legal and regulatory framework
governing the collection, distribution, use, and contestability of consumer credit information. Currently,
no consumer in Pakistan can review, dispute, verify their own credit report, which is a fundamental block
to both access to financial services as well as basic consumer financial protections. Public and private
credit bureaus in Pakistan provide credit information on only 7 and 2 percent of the population
respectively. Changes in their governing regulations could have important effects on bringing more
potential borrowers into the formal financial system. Credit bureaus and credit registries are essential
parts of the financial infrastructure that facilitates access to formal finance, and when well designed with
the proper legal framework, they reduce information asymmetries, increase access to credit for small
firms, lower interest rates, improve borrower discipline and support bank supervision and credit risk
monitoring.
SBP established the electronic-CIB (e-CIB) system with mandatory membership for all banks and
financial institutions, but there are many gaps and restrictions in place. These preclude the effective
51
use of credit information to enhance access to finance, or to ensure consumers have adequate protections,
redress, and access to information, and which ultimately reduce coverage of potential borrowers. Among
these gaps, borrowers and third parties do not have access their own credit information, positive
information is not included in public bureau credit reports, credit histories do not include information
from non-financial institutions, and regulation of private bureaus is fragmented and limited. Furthermore,
there is currently no legislation governing credit information. As a result, the SBP has drafted a CIB Law
in 2010, Credit Bureau Act. By providing access to credit information, this action introduces
transparency in credit approvals and aims to reduce discriminatory lending practices. At the same time,
this action provides clarity on the regulatory environment for private credit bureaus, consolidates and
strengthens the role of the supervisory authority, and allows for the provision of both positive as well as
negative information, and information collected from non-banks, such as utility companies. In the
medium term, this law is expected to increase coverage and enhance the quality of credit information
available, while in the short term it will change the Doing Business rating for Getting Credit indicator in
Pakistan. Finally, this action is supplemented by the government's efforts to compile a database of credit
information of microfinance borrowers (mf-cib) and the State Bank of Pakistan's ongoing work on
secured transactions.
Relative to the use of real property, the use of movable property as collateral is not widespread in
Pakistan. The underutilization of movables as collateral has economic impacts, particularly for
agricultural producers, women, and SMEs. Agricultural producers, women entrepreneurs, and SMEs
rarely have sufficient land or access to guarantors, which limits their access and increases the cost of
credit. These factors particularly restrict the growth of SMEs in Pakistan, where the bulk of SMEs are
engaged in trade and services (51% and 35%, respectively), and have most of their assets in inventories
and receivables or other forms of movable assets.
A modern secured transactions framework in Pakistan would facilitate the use of movable property
as collateral. As opposed to solely relying on immovable property, it would increase access to
commercial sources of finance, and decrease costs of finance. The current secured transactions system is
limited by the time, cost, and uncertainty in (i) establishing claim to the property to secure payment of
credit, while allowing the debtor to retain possession of the collateral; (ii) prioritizing claims; (iii)
publicizing the ranking of the priority; and (iv) taking possession of the collateral for sale to satisfy the
claim. In response to the need for reform of the secured transactions system in Pakistan, SBP has drafted
the Secured Transactions Act of 2013, which represents a positive development in the improvement of
the secured transactions framework in Pakistan. The most positive aspects of the law are the extension of
the possibilities to create fixed and floating charges over all kinds of movable assets to individuals and to
entities other than companies, and a broad definition of movable assets. In addition, the design of the
regime is based on the general principle of perfection by registration, an organized system of registration,
and the swift enforcement of secured credit.
International experience has shown that insurance can play an important role in helping the poor
manage their risks by protecting the assets and incomes of low-income households when financial
losses occur. The market for micro-insurance in Pakistan remains severely underdeveloped due to the
lack of awareness about the potential benefits of micro-insurance among micro-entrepreneurs, small and
landless farmers, women, and low-income households, and due to the lack of effective mechanisms and
targeted products to provide micro-insurance services and address the existing or potential demand.
Moreover, most of the activities in this sector remain broadly unsupervised due to the inexistence of a
specific regulatory framework. The SECP has finalized draft rules for micro-insurance which were
published in J une 2013 in the official gazette of Pakistan for seeking public comments. The rules are
waiting to be finalized and notified. In Pakistan, where insurance premiums represent just 0.5-0.1 per
cent of GDP, and there is the potential to increase the number of micro-insurance holders from 5 million
52
to 30 million, it is anticipated that this initiative will help in creating a transparent and enabling
environment thereby increasing the insurance density and affordable outreach to low-income people.
Pakistan has taken substantial steps towards improving its Anti Money Laundering (AML/CFT)
regime, including by issuing a Statutory Regulatory Order that addresses the definition of terrorism and
an Anti-Terrorism Amendment Ordinance to establish procedures for the identification and freezing of
terrorist assets. The FATF has commended Pakistan for the issuance of the Anti-Terrorism Amendment
Ordinance, which came into force on 12 October 2013 and allows Pakistan to begin implementing its
United Nations Security Council Resolution 1373 obligations immediately. However, the FATF has
concerns regarding the temporary character of this ordinance, which will need to be converted into
permanent legislation through the parliamentary process, and has urged Pakistani authorities to take the
necessary steps for swift ratification of the ordinance by its legislature.
53
ANNEX 10. CREATION OF FISCAL SPACE THROUGH REVENUE MOBILIZATION
Since the early 1990s, successive governments have tried to reform Pakistans tax system. However,
implementing these reforms had not been easy and the tax-to-GDP ratio has remained low at below 10
percent of GDP, of which revenue collected by the Federal Board of Revenue (FBR) amounts to only 8.5
percent of GD
7
. This relatively low tax ratio stems from a variety of structural issues including: (i) certain
constitutional provisions which introduce inequity and dichotomy in taxation of certain incomes (e.g.
agriculture); (ii) inefficient tax administration (poor management, weak human resources, lack of
adequate IT supporting systems, excessive scope for discretion and rent seeking behavior; (iii) a narrow
tax base (of 39.4 million employed persons, less than 10 percent of whom are registered and active
taxpayers further eroded by numerous and generous exemptions and concessions; (iv) skewed tax
structure (68% of tax revenue is from indirect taxes); (v) a complex and non-transparent tax system; (vi)
corruption and tax evasion (low compensation of tax officials, large informal sector); and (vii) a non-
supportive political economy environment (strong vested interest groups). Perhaps the three most
important areas for reform are: the reduction of tax exemptions, the massive registration of new
taxpayers, and the achievement of effective tax audits.
It is critical that the government adopts a tax reform strategy which is more align with the needs of
the government and ground realities. Due to some fundamental changes in the countrys fiscal
landscapeincluding the Seventh National Finance Commission Award and the 18
th
Amendment
existing FY02 FBR strategy on tax policy and administration has become obsolete. The Sharif
administration has committed to raise the overall tax ratio to 14 percent of GDP. The tax authorities have
agreed on the need for a new tax reform strategy.
Reducing exemptions is central to the core tax agenda. The tax base is eroded by a large number of tax
exemptions and tax concessions granted to various sectors, sub-sectors and economic activities. Tax
Authorities estimate that exemptions from, and concessions on payment of income tax, sales tax and
custom duties deprive the government of revenue amounting to a range between 1.9 - 2.5 percent of GDP,
with each type of tax contributing almost equally to this estimate. While a number of exemptions relate
to bilateral (e.g. IPPs) or Free Trade Agreements of the government; a sizeable number of exemptions and
concessions are outcomes of ad hoc policy decisions. In order to enhance transparency of tax
expenditures, the tax authorities have agreed to publish the tax expenditure report. To reduce the fiscal
cost of tax exemptions, the authorities have prepared a plan to eliminate the SROs and tax exemptions
over a period of three years. This plan will be put into implementation from the 2014/14 budget.
Increasing the number of registered taxpayers is also essential to broaden the tax base. An
extremely small number of population, (less than 1 percent), mainly wage earners, are registered as
taxpayers. The reasons for this woefully small number of registered taxpayers are many; but lack of
taxpayer information available to the tax authorities is the most important among these reasons. FBR has
made efforts to increase the number of registered taxpayers through the use of external (third-party)
information on: (i) acquisition of real estate; (ii) purchase of luxury cars; (iii) expenditure on children
education; (iv) expenses on foreign travel; etc. to identify potential taxpayers, i.e. individuals whose
living standard does not justify them to be outside the tax net. FBR plans to issue 100,000 notices to such
individuals in each of the next three years, with an attempt to register many of them as taxpayers. Follow-
up actions (see Figure A10.1) include: (i) establishing an institutional mechanism to oversee the potential
taxpayer response and chart the future course of action for FBR; and (ii) sending legal notices to at least
10 percent of individuals who would either not respond to the tax notices or would provide an
unsatisfactory responses. Increased number of taxpayers will also reduce the informal economy.
7
The tax/GDP ratio ranges between 30 to 50 per cent for developed countries, and an average of 18%, for developing countries.
54
Figure A10. 1. Sequencing of Follow-up Actions in Registering Potential Taxpayers
Instituting an effective tax audit system is critical for tax compliance: A more efficient tax audit
system will reduce tax avoidance and enhance government revenue. Tax enforcement remains among the
weakest areas of tax administration. And this is an essential gap as most of the federal taxes encourage
self-assessment by taxpayers. However, the number and quality of tax audits conducted by FBR
authorities remains insufficient to encourage correct assessment by a large number of taxpayers, thus
encouraging and facilitating tax avoidance. In an attempt to overcome this deficiency, in 2011/12, FBR
developed a well-known central system which adopted universally accepted parameters for identifying the
most risky (in terms of improper assessment of tax liability) taxpayers for the purpose of tax audits. A
little more than 11,000 cases were selected for tax audits. However, the risk-based audit system ran into
some legal challenges as superior courts called them discriminatory against some taxpayers. In response,
Authorities have amended the tax laws to avoid future court rulings against the system, which they are
now applying to 2012/13 tax returns. In 2013/14, FBR launched an Integrated Tax Audit Management
System (ITAMS) that will allow it to monitor daily compliance with audit performance benchmarks. It
has also opted for a computer-based random ballot selection of (of at least 5 percent or over 41,000)cases
for tax audits. Overall, FBR plans to complete at least 8,000 audits during the year. For 2014/15, the
authorities intend to revert back to risk-based audits. For this, they have not only amended the tax laws to
avoid future court rulings against the system, but as also decided to increase the number of audits to 7.5
percent of tax returns filed for the tax year 2014.
Enhanced transparency of taxpayer information, especially of rich and powerful, can help in
improving the tax culture in the country. Pakistan tax collection is adversely impacted by a culture of
weak tax compliance, tax avoidance and tax evasion. One reason for this non-supportive tax culture is the
perception within the public that countrys tax system supports and abets the affluent and powerful
segments of the population. In order to dispel this impression, the FBR published a tax directory of all
taxpayers who have filed tax returns for the tax year 2013.
FirstNoticeIssued
NoResponse
SecondNoticeIssued(afterxx
weeks)
Noresponse
Thirdnoticeissuedor
preliminaryassessmentmade
ontaxliability(afteryy weeks)
Noresponse
Preliminaryassessmentmade
ontaxliabilityorlegalnotice
issued(afteryy weeks)
Noresponse
Legalnoticeissuedorlegal
proceedingstarted(afteryy
weeks)
PotentialTaxpayerresponded
Iflegibletaxpayer Taxpayer
registered,tax
assessed/collectionreceived
PotentialTaxpayerresponded
Iflegibletaxpayer taxpayer
registered,tax
assessed/collectionreceived
PotentialTaxpayerresponded
Iflegibletaxpayer taxpayer
registered,tax
assessed/collectionreceived.
55
0%
20%
40%
60%
80%
100%
FY00 FY02 FY04 FY06 FY08 FY10 FY12
Treasury Bills National Saving Schemes Bonds
Source: State Bank of Pakistan
ANNEX 11. PAKISTAN: DEBT SUSTAINABILITY ANALYSIS
Overall Trend. The downward trend of the public
debt-to-GDP ratio reverted in the last two years.
Public debt-to-GDP ratio breached the bar of 60
percent limit specified by the Fiscal Responsibility
and Debt Limitation Act 2005 in the last two Fiscal
Years (Figure A11.1).
The main reason is the doubling of the amount
of domestic debt issued. Domestic debt increased
from Rs. 4.7 trillion at end-J une 2010 to Rs. 9.5
trillion by end-J une 2013. Increasing reliance on
domestic financing and declining financing from external sources is explained by the large fiscal deficits
and their monetary financing.
Domestic debt creation has become increasingly skewed towards short-term instruments. Domestic
debt consists of Market Treasury Bills (MTBs), borrowing from the SBP, and retail debt market
instruments such as National Saving Schemes (NSS). At end-J une 2013, almost 60 percent of domestic
debt was issued in short-term instruments,
namely, 3-, 6-, and 12- months MTBs (see
Figure A11.2); followed by PIBs (22.8 percent)
and retail debt instruments (22.4 percent).
Borrowing from the SBP through Market
Related Treasury Bills has also substantially
increased. The SBP Amendment Act 2012
(Section 9c) stipulates that net borrowing from
the SBP has to be brought to nil on a quarterly
basis. However, this limit has been repeatedly
breached in the past. Borrowing from the central
bank at end-June 2013 stood at Rs. 2.3 trillion
compared to Rs. 1.3 trillion at end-J une 2010.
Scheduled Banks remain the prime lenders to
the government. The banking sector, despite
their asset-liability mismatch balance sheet
structures, dominated the government securities
market (see Figure A11.3) while the
participation of non-banks is still abysmally low.
Growing budgetary needs led banks prefer such
option. As a result, credit to the private sector
was crowded out: its amount became almost
negligible. Given recently accelerated placement
of MTBs, refinancing risk has increased. The
redemption profile on domestic debt has become
highly frontloaded. By end-J une 2013, its
average time to maturity was 1.8 years which is
high. This risk is further compounded by the put
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
FY01 FY03 FY05 FY07 FY09 FY11 FY13
P
e
r
c
e
n
t
a
g
e
o
f
G
D
P
R
s
t
r
i
l
l
i
o
n
Domestic
External
0%
20%
40%
60%
80%
100%
Q
1
-
F
Y
1
1
Q
2
-
F
Y
1
1
Q
3
-
F
Y
1
1
Q
4
-
F
Y
1
1
Q
1
-
F
Y
1
2
Q
2
-
F
Y
1
2
Q
3
-
F
Y
1
2
Q
4
-
F
Y
1
2
Q
1
-
F
Y
1
3
Q
2
-
F
Y
1
3
Q
3
-
F
Y
1
3
Q
4
-
F
Y
1
3
Scheduled Banks Non-Banks/Corporates
Source: State Bank of Pakistan
Figure A11. 1. Pakistan Evolution of Public Debt
Figure A11. 2. Structure of Domestic Debt 1999/2000-
2010/13
Figure A11. 3. Share of MTBs Holdings by Investor
56
44%
23%
26%
7%
USD EUR J PY Other
Source: Economic Affairs Division, Government of
option embedded NSS instruments which give investors the right of early redemption.
As a result, external debt has become about one fifth of total public debt. Multilateral institutions
accounted for nearly half of the external public and
publicly guaranteed (PPG) debt with the main
two creditors being the Asian Development Bank
and the World Bank (capturing 21 percent and 18
percent of total external debt). Bilateral held
almost one third of total external debt. Within
bilateral creditors, Paris Club countries accounted
for almost 23 percent of total external debt.
Currency composition of PPG external debt is
diversified. The main exposure of exchange risk to
foreign currencies comes from USD denominated
loans (see Figure A11.4). External debt US dollars-
denominated represents 44 percent of total external
debt. This is followed by J apanese Yen (26
percent) and euros (23 percent).Exposure to
exchange rate risk is high but declining. The
amount of foreign loans maturing in 2013/14
(including repayments to IMF) is equal to almost
68.5 percent of foreign exchange reserves. Hence, a depreciation of the Rupee would affect both the stock
of the government debt as well as the debt servicing flows.
Debt Sustainability Analysis. Under our baseline scenario, Pakistans public debt-to-GDP ratios are
projected to decline over the medium term. With a targeted consolidated fiscal deficit (excluding grants)
of 4.4 percent of GDP by 2017/18, public debt is projected to fall from 64.2 percent of GDP in 2013/14 to
58 percent by 2017/18 (see Table 1). However, even though gross financing needs are also expected to
decline from 33 percent of GDP in 2013/14 to 28 percent in 2017/18, these remain high, thus posing
significant refinancing (or rollover) risk. These should be monitored, especially with regards to maturing
short term domestic debt. Early fiscal consolidation reflecting adjustment measures deemed politically
feasibleincluding subsidy reduction and tax policy and administration actionsand strong economic
growth are expected to support the decline in public debt ratios.
2011 2012 2013 2014 2015 2016 2017 2018
Public sector debt 1/ 59.4 63.7 63.0 64.2 63.5 62.1 59.5 58.0
o/w foreign-currency denominated 2/ 26.5 25.7 21.4 23.1 22.7 22.0 20.0 18.0
Key Macroeconomic and Fiscal Assumptions
Real GDP growth (in percent) 3.7 4.4 3.6 3.6 4.0 4.4 4.7 5.0
Inflation rate (in percent, period average) 13.7 11.0 7.4 10.0 9.2 8.4 7.3 7.0
Primary deficit /3 2.5 4.0 3.6 1.1 0.3 0.0 0.1 0.5
Source: World Bank staff estimates
3/ Excluding grants.
2/ This includes mediumand long termPPG debt as well as short-termexternal debt. This also includes IMF debt (both budget support
and balance of payments support), Foreign currency bonds as well as Central bank deposits.
Table 1: Base case debt projections
(In percent of GDP, unless otherwise indicated)
Actual Projections
1/ General government gross debt
Figure A11. 4. Currency Composition of PPG External Debt
(including IMF) at End June 2013
57
Stress tests show that public debt is particularly sensitive to an exchange rate depreciation shock.
Stress tests show that the most important deterioration of public debt levels vis--vis the base case
scenario would take place in a scenario of a one-time 30 percent depreciation shock, followed by a
contingent liabilities shock, and a combined shock (see Figure A11.5). In the case of the most extreme
shock, a 30 percent one-time depreciation, the public debt ratio would increase to 68.6 percent of GDP by
end-2018; 11 percentage points of GDP above the baseline. Another scenario with significantly worse
outcomes than the baseline is a one-time contingent liabilities shock, equivalent to 10 percent of GDP,
which would lead to an
increase in the debt stock to
67.1 percent by end-2018, 9
percentage points of GDP
above the baseline.
Public debt dynamics will
remain a source of fiscal
vulnerability. Despite the
gradual decline in public debt
ratios, total interest payments
will continue to absorb a large
share of fiscal revenues
(including grants), averaging
close to 30 percent of total
revenues. The public debt-to-
revenue ratio during the
projection period is projected to average around 409 percent, well above other countries in the region.
However, external debt sustainability risk is projected to remain low under the baseline scenario.
External debt-to-GDP is projected to decline gradually over the medium term to 22 percent of GDP under
the baseline scenario, owing to persistent inflationary pressures in the short term, sustained economic
growth, and large IMF
repurchases due in the medium
term. External debt is robust to
most shocks and is expected to
follow a declining path under
most standardized-shock
scenarios (see Figure A11. 6).
Most extreme shock appear to
be sharp exchange rate
depreciation which increases
the external debt to GDP ratio
to 32 percent of GDP by end-
J une 2018, which is 11 percent
of GDP higher than the base
case. Non-interest current
account shock raises the
external debt by 5 percent of
GDP relative to the baseline.
Shocks to the economic growth rate, the external interest rate, and the combined shock, make only small
differences with respect to the baseline scenario.
50
55
60
65
70
75
80
2
0
0
8
/
0
9
2
0
0
9
/
1
0
2
0
1
0
/
1
1
2
0
1
1
/
1
2
2
0
1
2
/
1
3
2
0
1
3
/
1
4
2
0
1
4
/
1
5
2
0
1
5
/
1
6
2
0
1
6
/
1
7
2
0
1
7
/
1
8
Actual Projections
I
n
p
e
r
c
e
n
t
o
f
G
D
P
Contingent
liabilities 1/
Combined 2/
ER depreciation 3/
Baseline 4/
Source: World Bank staff estimates
Notes: 1/ One time 10 percent of GDP increase in other debt creating flows in 2014/15
2/ Combination of three shocks: i. Real GDP growth is at baseline minus one-quarter standard deviation,
ii. Primary balance is at baseline minus one-quarter standard deviation, iii. Real interest rate is at baseline
plus one-quarter standard deviation
3/ One time 30 percent real depreciation in 2014/15
10
20
30
40
2
0
0
8
/
0
9
2
0
0
9
/
1
0
2
0
1
0
/
1
1
2
0
1
1
/
1
2
2
0
1
2
/
1
3
2
0
1
3
/
1
4
2
0
1
4
/
1
5
2
0
1
5
/
1
6
2
0
1
6
/
1
7
2
0
1
7
/
1
8
Actual Projections
I
n
p
e
r
c
e
n
t
o
f
G
D
P
Current account 1/
Combined 2/
ER depreciation 3/
Baseline 4/
Source: World Bank staff estimates
Notes: 1/ Non-interest current account is at baseline minus one-half 10-year historical standard
deviations
2/ Combination of three shocks: i. Non-interest current account is at baseline minus one-quarter
standard deviation, ii. Real GDP growth is at baseline minus one-quarter standard deviation, iii.
Nominal interest rate is at baselineplus one-quarter standard deviation
Figure A11. 5. Public Debt Sustainability Analysis
Figure A11. 6. External Debt Sustainability Analysis
58
The Effects of an Eventual Worst Case Scenario. An alternative scenario would assume slowdown in
reforms efforts especially after 2015/16 due to political economy challenges mostly followed by an early
start of the political cycle previous to the election process. Under this scenario, the IMF program would
derail, reforms would slowdown, fiscal consolidation would lose steam, investors confidence would
falter, and all this would result in lower GDP growth and higher inflation.
Key Economic Indicator:
Inflation after falling till 2015/16 will return to double digit in 2017/18. Given the assumption that
Pakistan will enter an election cycle in 2016/17 means that political considerations would kick in
higher public sector expenditures due to higher subsidies, fuel consumption and thus inflation
2015/16 onwards. In addition, relatively weak external position would also exert inflationary
pressures through exchange rate depreciation pass through in prices of imported goods and services.
Fiscal consolidation would stop. With lower revenues and higher expenditure, Government would
struggle to bring this deficit below 5 percent in medium term.
The external current account would register relatively larger deficit post 2014/15. Higher
exchange rate volatility emanating from relatively weaker macroeconomic position and the slowdown
in reforms, post 2014/15, would dampen export dynamism. Fuelled consumption would support
higher imports and a higher current account deficit. Resulting import coverage (months of reserves
sufficient to cover next years imports of goods and services) would decrease from 2.4 in 2015/16 to
1.1 months in 2017/18 mostly due to the financing of a higher current account deficit.
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Output and Prices
Real GDP at factor cost 2.6 3.7 4.4 3.6 3.6 4.0 4.0 4.0 4.3
Consumer Prices (period average) 10.1 13.7 11.0 7.4 10.0 9.2 8.5 10.0 11.0
Balance of Payments
Current Account Balance(as % of GDP) (2.2) 0.1 (2.1) (1.0) (1.0) (1.1) (1.5) (2.2) (2.5)
Exports of goods & services 14.0 14.6 13.2 13.3 14.9 14.7 14.5 14.3 14.0
Imports of goods & services 21.5 20.4 21.6 20.5 22.5 23.1 23.3 23.6 23.3
Remittances 5.0 5.2 5.9 5.9 6.4 6.6 6.6 6.4 6.1
Gross official reserves (in months of imports of G&S) 1/ 3.6 3.9 2.7 1.4 1.8 2.3 2.4 1.8 1.1
Public Finance
Revenues and Grants 14.3 12.6 13.1 13.3 14.3 14.0 13.9 14.2 13.2
Expenditures 20.2 18.7 21.2 21.0 19.9 19.3 19.2 19.8 18.7
of which: Current 16.7 15.9 17.5 16.0 15.5 15.1 15.1 15.6 14.3
Overall Fiscal Balance2/ (6.2) (6.5) (8.8) (8.0) (5.8) (5.5) (5.5) (5.7) (5.6)
Total Public Debt (incl. obligation to IMF) 61.3 59.4 63.7 63.0 64.2 63.6 63.1 60.7 58.8
Memorandum:
GDP at Market price(in billion Pakistan Rupees) 14,876 18,825 20,091 22,909 26,139 29,485 33,154 37,880 43,641
Notes:
1/ Excludinggold and foreign currencu deposits of commercial banks held with theStateBank of Pakistan.
2/ Excludinggrants.
Source:International Monetary Fund and WB staff
Projections
59
ANNEX 12. PUBLIC FINANCIAL MANAGEMENT AND PROCUREMENT
Pakistan has a fairly well-developed infrastructure for public financial management (PFM). At the
policy level, Parliament has a key role in authorizing revenues, expenditures, and debts. The MOF plays a
pivotal role in budget preparation and expenditure control. Line ministries, departments, and agencies
have well-defined roles in implementing budgets and rendering accounts. The Controller General of
Accounts prepares annual financial statements. PFM benefits from a comprehensive financial information
system, which is now the core fiscal and financial management system of government. The government
has established a sound legal framework for coordinating fiscal and debt management policies and for
improving fiscal transparency through the Fiscal Responsibility and Debt Limitation Act of 2005. The
Public Expenditure and Financial Accountability (PEFA) 2012 scores compare very favorably with other
countries in the South Asia region (Figure A12.1).
SBP is now producing financial statements consistent with international accounting standards and
formats. The financial statements of SBP for the financial year ended 30 J une 2012 were audited by Ernst
& Young Ford Rhodes Sidat Hyder and KPMG Taseer Hadi & Co. The auditors gave an unqualified
opinion on the statements concluding that the statements gave a true and fair view of the financial
position, financial performance, and cash flows. An IMF Safeguards Assessment of the SBP was issued
on March 27 2009 and an update report was also produced on March 3 2010. Both these reports have also
been reviewed by the World Bank.
Figure A12. 1. PEFA Assessment Scores for South Asia
Note: South Asia countries include Afghanistan (2008), Bangladesh (2006), Nepal (2008), Bhutan and India (2010), and Maldives (2009).
Information in budget documents is comprehensive and budget documents are available to the
general public. The improvement in the Open Budget Survey score for 2012 from 38 to 58 reflects this.
Implementation of the Integrated Financial Management Information System is based on the Government
Finance Statistics-compliant chart of accounts at all levels of government has facilitated budget tracking
down to the third tier and preparation of timely reliable financial reports. The System facilitates
submission of annual financial statements for audit within two months of the close of the financial year
and monthly financial reports are finalized within 1015 days after the close of the month. Audit reports
are presented to the legislature within eight months of the close of the financial year.
Despite progress in many areas of PFM, the latest federal and subnational PEFA reports show
some areas of concern. The internal control system is largely based on rules and regulations issued by
the MOF, which are quite elaborate. However, instances of noncompliance with rules and regulations
have been reported by the Auditor General of Pakistan. It is therefore of particular concern that no
progress has been made on internal audit in recent years. The internal audit function is assigned as a
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Federal SouthAsia
60
responsibility of chief finance and accounting officers, but has not yet been developed as an
administrative operating function. Progress in legislative oversight has also been mixed across federal and
provincial governments, largely due to the absence of functioning public accounts committees in some
provinces. The scrutiny of audit reports by the most recent federal committee, however, was extensive
and succeeded in addressing a large backlog of audit reports to be reviewed.
Improving PFM capacity at provincial and lower tiers has emerged as a key challenge. The capacity
to plan, manage, implement and account for results of policies and programs is critical for achieving
development objectives. With the 18th Amendment to the Constitution (April 2010), the majority of
service deliveryrelated functions have devolved to the provinces. The government realizes the need to
strengthen its PFM systems by addressing the capacity of provincial institutions, processes, and
individuals to use resources well. This is supported by findings of recent subnational PEFA assessments
that have highlighted the scope for improving capacity to manage provincial finances. Weaknesses are
somewhat mitigated by the consolidation of current PFM reforms which include nationwide automation
of budgeting, accounting, and financial reporting; modernization of auditing practices; and adoption of
medium-term budgetary frameworks.
Procurement
A strong public procurement system enhances the efficiency of budgetary expenditure. Typically for
a developing country 15-20 percent of annual GDP is related to procurement contracts. Pakistan should be
no exception. n Pakistan, procurement is a devolved subject. The Public Procurement Regulatory
Authority (PPRA) at the federal and provincial levels is mandated to regulate procurement function and
act as respective custodians of the regulatory frameworks. PPRAs are functional at the federal level, in
Sindh and in the Punjab; with laws enacted, rules notified. In Khyber Pakhtunkhwa, however, the PPRA
is at a nascent stage, law has been enacted and rules are yet to be notified. Balochistan enacted
procurement regulations in 2009 but are yet to implement it in earnest. Recently the National Procurement
Strategy has been developed which highlights the need of harmonization amongst the various PPRAs,
specifically towards having harmonized standard bidding documents; capacity building of PPRAs;
monitoring through M&E system; procurement professionalization and e-procurement. A major
development in monitoring is the effort to align the Auditor Generals office and procurement regulators
to conduct procurement performance audits. The Bank is supporting the PPRAs in developing the e-
procurement strategy, as well as preparing a training strategy for procurement staff. The Sindh and Punjab
PPRAs are also working towards developing their M&E systems. . Federal and provincial regulations are
also a good support in enhancing transparency and thus accountability of public expenditures.
While the good aspects of the regulatory regime that assures competitiveness may be diluted by
gaps in implementation, there are certain SROs or Import Policy Orders (IPOs) or legal
interpretations which overlap with the procurement function. Government has been engaged in a
discussion with development partners on SRO 827(I)/2001 and SRO 809/I/86 that limit competition by
making local participation in goods procurements compulsory. The review may cover SROs/directives
and any other instructions having such implications, in order to facilitate equal opportunity and adequate
support to local industry. A study is also deemed beneficial to review the overlapping jurisdiction of the
various accountability and other institutions on procurement function, specifically in view of the 18
th
amendment, which may imply double/uneven taxation to bidders incorporated in different provinces. On
privatization, governing regulations are: (i) Privatization Commission (Hiring of Financial Advisors)
Regulations, 2007; and (ii) Privatization Commission (Hiring of Valuators) Regulations, 2001 amended
in 2007. These regulations are framed under Section 41 of PC Ordinance 2000. In a letter to Transparency
International in 2009 PC clarified the jurisdiction of Public Procurement Rules 2004 (PPR-2004). As the
privatization process is about selling rather than acquiring assets it is not a considered as a
procurement activity as defined by Section 2 (l) of Public Procurement Regulatory Authority Ordinance,
2002.
61
ANNEX 13. ANALYTICAL AND ADVISORY ACTIVITIES: MAJOR FINDINGS AND RECOMMENDATIONS
DPC Focus Areas AAA work Key Recommendations
Growth Enhancing
framework
Finding the Path to Job-Enhancing Growth - Country
Economic Memorandum (FY13) considers reformchoices for
Pakistan (piecemeal or comprehensive), for its transformational
agenda leading to job-enhancing growth.
Pakistan needs to create more productive jobswith jobs defined to include all wage work and self-employment, formal or informalfor a reliable route to
move away frompoverty, crime, and civil conflict. Rapid growth and more and better jobs should be pursued in tandemfor sustainability. In this regard, the
report suggests a menu of reforms with political economy analysis.
A bold agenda is the only way to achieve the economys potential, and to reach high, sustained and inclusive rates of growth.
Stabilization itself is a necessary but not sufficient condition for growth acceleration. Instead the country must address its main constraints to growth: power
shortages, low savings and investments, business governance constraints and low openness.
Expanding Social
Protection and
Mobilizing Revenue
Policy note: Mobilizing Revenue (2013) reviews key
shortcomings in Pakistans revenue mobilization systemand
provides directions for its revitalization.
Proposed reforms include eliminating exemptions and zero rates, adjusting income tax rates, simplifying tariffs, expanding user-friendly electronic
registration and filing, zero-tolerance policy for noncompliance and evasion, and overhauling the technical capacity and accountability of the administration,
especially in information technology systems, auditing, and enforcement. The provincial level policy reforms include broadening the tax base/improving
collections (fromGST on services, motor vehicle tax, and property tax), incentivizing tax collection, and enhancing the capacity of tax administration.
Policy note: Promoting Efficient Service Delivery with
Decentralization (2013) identifies key reasons for the failure of
decentralization in Pakistan, and suggests policy reforms for
positive impact on social outcomes.
There is a role for local governments in municipal and other local services, while devolving other key provincial services likehealth and education to
autonomous provincial authorities. For the financial sustainability of devolved functions there is need for improved revenue efforts by the federal and
provincial governments and maintenance of fiscal discipline by the provinces.
Policy note: Improving Financial Management (2013)outlines
Pakistans challenges in Public financial management and
suggests options for meeting them.
A second generation of reforms is to be introduced that focuses on decentralizing budget management (preparation and implementation to the line
departments), strengthening cash management through business process reengineering, and augmenting the capacity of procurement regulatory authorities.
Khyber Pakhtunkhwa, Public Expenditure Review report
(2012) analyzes overall budgetary, fiscal and financial
management systemfor improving delivery of social services
and quality of life.
Other than increasing its tax revenues, the province needs to analyze sustainability of current expenditure and its relevance to service delivery, improve
human resource for development activities, avoid thin-spreading of funds over large number of projects, and enforce budget constraints favoring project
completion. Linking expenditure and learning outcomes, and removing demand side barriers for greater access to social services are important.
Punjab Social Sector Public Expenditure Review report
(2013)provides strengths and weaknesses of provincial
governments expenditure and financial management.
The efficiency and effectiveness of social spending require substantial improvements. The government needs to make additional efforts to remove the
lingering limitations fromthe fiscal and financial management systems, as well as effectively and innovatively tacklethe sectoral impediments with support
fromprivate sector investment.
Education and gender sectors:
Policy note: Expanding Access to Quality Education (2013)
reviews main reasons for disparities between provinces on
access to quality education and low outcomes.
The main contributing factors include poor teacher quality and accountability, inadequate and inefficient funding, and weak management and governance.
Post-18th Amendment, the provinces are responsible for management and financing of education, but Federal government also needs to set national
standards and monitor their achievements to address disparities in access to quality education between provinces.
Pakistan Gender Policy Notes (FY13) makes suggestions to
mainstreamgender into education sector at provincial level.
Greater investment is to be made in education, particularly for girls in rural areas. There is need for province specific research and analysis and thus the role
of academia, CSOs, and national machineries for women.
Health sector:
Cost-effectiveness and financial consequences of new vaccine
introduction in Pakistan (FY12)
While the investment in vaccine (pneumococcal (PCV-10), rotavirus (Rota-Teq), and Homophiles influenza type B (Hib)) would be worthwhile froman
economic perspective, introducing all threevaccines in Pakistan will present financial challenges unless overall health spending increases. Careful
consideration needs to be given to long-termfinancing after GAVI support ends.
Expanded program on immunization in Pakistan:
recommendations for improving performance (FY12).
Increasing focus on supervision, monitoring and evaluation, (ii) performance-based incentives, (iii) partnerships with the private sector, (iv) expediting polio
eradication initiatives, (v) improved management, (vi) targeted capacity development, (vii) targeting age group for immunization, (viii) a human resource
strategy and implementation plan, and (x) improving planning at the local level.
Protecting Pakistans Poor Against Health Shocks in Disasters
(FY13) assess the impact of 2010-floods on health status and
access
Provincial Health Emergency Preparedness and Response Unit has been constituted to adopt a policy of preparedness for different disasters and their health
consequences by effectively managing the risks and impact of natural and complex catastrophes affecting humans.
Social protection:
Policy note: Consolidating Social Protection (2013) considers
providing appropriate, adequate and predictable benefits to the
poor, through a sound and financially viable system.
BISP can be further improved through partnership arrangement between federal and provincial governments for social protection (SP) service delivery;
establishing a national SP framework that is coherent between federal and provincial authorities; harmonized systemfor design and delivery of above
framework; and financing for SP based on affordability and efficiency principles. Enabling effective p ost-disaster early recovery cash transfers as part of
disaster response action plan is also needed.
Social Safety Nets in Pakistan: Protecting and Empowering the
Poor and Vulnerable (FY12) provides an assessment of
Pakistans recent social safety net programs and suggests a
road-map /recommendations for improvement.
The household poverty survey database can be used to target other human development or employment services programs. Further modernization of the
sector would require: (i) using available resources effectively (establishing central bodies with responsibility for SP in provincial governments,
implementing graduation programs, integrating the disaster response mechanisms and safety net institutions); (ii) responding to household-level crises
(households insurance against the negative effects of catastrophic illness); and (iii) instituting regular monitoring mechanisms and improving program
design over time.
Impact Evaluation of SSN Programs (FY14, ongoing): Short
TermImpacts of the BISP Unconditional Cash Transfer .
The main findings of the report are: (i) thelow benefit level and irregular payments of the BISP cash transfer are diluting the programimpact on
beneficiaries consumption; (ii) the programhas positive impact on women empowerment, and (iii) the impact evaluation did not find evidence that BISP
would produce dependency or work disincentive effects.
62
DPC Focus Areas AAA work Key Recommendations
Labor Supply and Vulnerability in Pakistan (FY14, ongoing)
aims to informBank lending in designs of poverty exit /
graduation projects that utilize BISP poverty scorecard
database.
Improve the information/data base for analyzing these important development challenges, through fielding an Employment and Skills Survey. Limited
capacity building will be carried out as part of this work, through (i) close collaboration with a local survey firmin the design and implementation of the
employment and skills survey, including the training of master-trainers who would be tasked to train the interview teams; and (ii) commissioning papers to
local researchers.
Reinvigorating State
Owned Enterprises
Reform
SOE Reforms Technical Assistance (FY14, ongoing) is for
helping develop and implement a strategic framework for SOE
reforms.
The legal framework and institutional mechanisms for investment tracking and performance management of state-owned enterprises (SOEs) are weak.
Corporate governance needs to be strengthened within SOEs by (i) making the board nomination process structured and transparent, (ii) improving board
accountability, and (iii) developing performance contracts and indicators.
Reforming SOEs Pakistan Policy Notes (FY13) a menu of
policy choices for theGovernment.
Emphasizing the urgency of SOE reforms (including commercializing SOEs), main recommendations are to curtail fiscal costs, professionalize the role of
the government as owner, and improve corporate governance and accountability in state enterprises.
SOE Reform: Time for Serious Corporate Governance (FY12)
corporate governanceis at the top of the 'constraints to
economic growth
Improve the efficiency and effectiveness of SOEs, which includebasic governance reforms, revamped commercialization processes and enhanced market
regulations. The paper also provided perspectives on international experiences with SOE reforms combined with some suggestions on how the Government
can move forward.
Improving
Investment Climate
Promote Access to
Policy note: Reinvigorating the Agenda for Open Trade (2013)
measures to improve Pakistans trade performance for growth
and jobs creation.
To improve its trade competitiveness and its place in international markets, Pakistan needs to simplify tariffs and trade regulations (to reduce the anti-export
bias); accelerate deep preferential trade agreements to encouragetrade creation; fully normalize trade relations with India to benefit fromgrowth there; and
address logistical weaknesses to reduce trade costs.
Doing Business in Pakistan (FY11) provides analysis of seven
DB indicators in 13 districts across the country.
It would help generate Doing Business (DB) reformagenda at the provincial and Federal levels, as it provides a monitoring and evaluation framework to
measure progress in the implementation of such reforms. The report highlights potential good practice on investment climate reformwithin Pakistan which
can be adopted by other jurisdictions.
Doing Business Follow-up Reform Memos (FY12). District-specific reformmemos were prepared and disseminated for Gujranwala, Sialkot and Rawalpindi covering three DB indicators: starting a business,
construction permits, and trading across borders.
A Blueprint for Business Registration Reform through a One-
Stop-Shop (FY13 ongoing). Steps for OSS business registration
implementation.
Implement integration of business registration processes through a virtual one-stop-shop (OSS) mechanism, by consolidating and streamlining key processes
of SECP, FBR and EOBI for corporates in the first stage, and later setting up a physical OSS in one district before scaling it up and rolling it across Pakistan.
Pakistan FSAP Update Diagnoses vulnerabilities and analyzed development priorities in the financial sector (banking sector, securities/capital markets, and financial inclusion
related issues), while supporting a coordinated dialogue with national authorities, and enhanced effective collaboration between the Bank and the Fund.
Consumer Protection & Financial Literacy Diagnostic
Assessment (FY13, ongoing) on consumer protection and
financial literacy
Assessment of the legal, regulatory and institutional frameworks for financial consumer protection compared to international best practice benchmarks,
covering the banking, insurance, microfinance, and securities sectors. The Micro Insurance Rules recently drafted by SECP include a Code on Consumer
Protection.
Are Pakistan's Women Entrepreneurs Being Served by the
Microfinance Sector? Report (FY13)
The report focused on products, services, policies, and other elements of the business model of microfinance in Pakistan that affect both demand for and
access to microfinance by women borrowers, some of whomfall into the narrower category of entrepreneurs. The report documents consumer protection
issues (giving loans to male household members despite women being a better potential customer with high return rate), and highlights a very low proportion
of female entrepreneurs as microfinance clients.
NLTA - A New Generation of Women Entrepreneurs in
Pakistan (FY14-FY15) is to help selected women entrepreneurs
grow their businesses in measurable and replicable manner.
Pilot intervention on an entrepreneurial microcosmfor a selected group of businesswomen operating micro and small firms in Pakistan.
This pilot programwill incorporate a packaged approach including: mentoring and networking support, access to more appropriate financial services, and
building and enhancing relevant business skills.
Trade Finance Knowledge Product (FY14) identifies
constraints and opportunities to expand access to trade finance
for the private sector.
Domestic and international trade finance mechanisms to (ii) identify whether there arepotential opportunities to expand access to trade finance; and (iii)
provide an informed assessment of whether undertaking the necessary reforms and investments would likely have a measurable impact for exporters,
potential exporters, suppliers to exporters, and/or specific industries.
63
ANNEX 14. COUNTRY AT A GLANCE
..
Pakistan at a glance
lOWM
middle
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65
Millennium Development Goals
VWh se le ded targets to achieve l>etwee n 199 0 and 20 15
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Goa t I: naiVe tilt ratu ror extrtmt povtrty a110 munutntton
POV!I'!J lleac!OOII'll raiiO at$125aOZJ ?PP %0 po p:lbiiOII)
POVfftJ lltac!OOI.r11 raiiO ill llliiiOnalpoVUf ltl t (%0 pojJJiiiDII)
Sl'lill!! oll'loomeorconwmpciOn 10 tllepoore1 <JJIIII!!
Prevat nceo :manJtriD n("io
Goa l 2: nur tna t cnl ort n are aD It to complete pnmary .cnoollng
PrtnarJ "'>
PrtnarJ rewa:n agegoup)
StcOilOarJ
Yo>AnKetacJ r,. o:peopl!ager.
Goals: eli minate g. notr PI nt y In eoucallon a not mpowtr womt n
RalD ol 10 CO)'fotl prtnar, ano &eOOIIOiii'J
women e:11 plOy eo n nonll!jOCUlural oe<:IO r{%011'0 'l.lg!CUCJI'l.l
Pro poniOn o oeali nell) oy wo tl natD ("
Goal 4: rtouce unou-s mortality tiJ two-tnuo
:'lder-6 mona 1 rze (per \000)
artmona J I'Zt{Ptr \OOODieOIIt'lr.)
MeasleUnmltll!:a:lon no 01111-' JUro IIUnmuniZeCI %)
GoalS: reouct matemal morta l t y Dr thr .. -rourtl\5
M;uerna lmorta!ly 1300 perm ooo DltOt;lt5)
Slnlti at:enoeo OJ Q .. o nea111 r.a r,.o:total)
Con:racrptlrt pl!!vali!':lce r,.owomenageo
&1
300
21
,g
a
10
IllS
06
so
l90
15
Goal' : llalt a no Dtgln to rtVtrU tilt 5,prta0 Of H IV/AIDS I no otntr major CI IUUU
Preval!nceol-tV ag5 !i-49) 0 1
tlctoenceotlberc:uiOn (per mooopeopl!!) 231
T -'letCJIOr. r. call!
Goal 7: naiVe tile proportion o r peoplt wltnout u.tatnatllt acceu to tlulc nno
Accus 10 an mproveowa err.ouce pojJJiaUon) as
Accer.s 10 mprov eo wnla:IOn acuter. po lXI a ton) 27
Forer.taear,.o la1oall!a) 3--l
Ttre&Htal proteaeo areu(%o lJ:'lOall!a) 0 1
C02emliSDno fn t<OC IOI':i percJpla) 0 6
G:>P perun& o t:ltflr Uit {OOI'IOQn: 200 5PPP $ pertgoole<Miilel'l) ( ,2
Goa l a: Otvtlop a gtoO&I partlltr5nlp lor oevtlopment
TeJell"llne mmttes tJer moeoplt)
Mo l)lle pno {Per 1l0 peo pl!)
'tU'Itl Uitl'i (pfl' OOpeopl!)
-.our.e,'loiCI' wtru com
Eoucaton In Olea lor' (%1
aoa., " a...c: rl
e LCIOD"I
Mta5lt5 lmmu nu:aion (%o111ur
01051
' T.! :ca:
oeveDpmentEcooomler.. OtveiOpm r11 Dill a Group (:)EOOG}
o.a
0.0
0.0
Pakistan
Pa ll61an
IUS 2000 2011
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79
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uo 330 21)!)
15 23 '3
13 25 17
01 0 1 01
231 231 231
87 aa 91
32 37 ' 7
30 2.7 2.1
1) 1 0 1 1.)1
07 07 00
'2 u 50
t7 2 1 3.2
00 02 6\6
00 fJ 90
1\0
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2Jtn.t
AFGHANI STAN
CHI NA
To
Mandi
30N
25N
65E 70E 75E
K2
(Mt. Godwin-
Austen)
(8,611 m)
B A L O C H I S T A N
S I ND H
P U N J A B
NORTHERN
AREAS
Quetta
Lahore
Peshawar
Muzaffarabad
ISLAMABAD
Srinagar
Kargil
Hyderabad
Faisalabad
Rawalpindi
Saidu
Chitral
D.I. Khan
Gujrat
Kahat
Bannu
Gujranwala
D.G. Khan
Multan
Sahlwal
Bahawalpur
Nok Kundi
Chaman
Surab
Zhob
Badin
Thatta
Panjgur
Ranipur
Turbat
Moro
Bela
Gwadar
Approximate
Line of Control
KHYBER
PAKHTUNKHWA
Jammu
and Kashmir
B A L O C H I S T A N
S I ND H
P U N J A B
KHYBER
PAKHTUNKHWA
FED. CAPITAL
TERRITORY
ISLAMABAD
FED. CAPITAL
TERRITORY
ISLAMABAD
Srinagar
Kargil
Hyderabad
Faisalabad
Rawalpindi
Saidu
Chitral
D.I. Khan
Gujrat
Kahat
Bannu
Gujranwala
D.G. Khan
Multan
Sahlwal
Bahawalpur
Nok Kundi
Chaman
Surab
Zhob
Badin
Thatta
Panjgur
Ranipur
Turbat
Pasni
Moro
Bela
Gwadar
Approximate
Line of Control
Karachi
Quetta
Lahore
Peshawar
Muzaffarabad
ISLAMABAD
AFGHANI STAN
I NDI A
ISLAMIC
REPUBLIC
OF
IRAN
CHI NA
TAJIKISTAN
Jammu
and Kashmir
I
n
d
u
s
R
a
v
i
S
u
tle
j
C
h
e
n
a
b
J
h
e
lu
m
Zho
b
In
d
us
M
a
s
h
k
a
i
I
n
d
u
s
Ar a b i a n S e a
Rann of Kutch
To
Kandahar
To
Kerman
To
Kerman
To
Khash
To
Jodhpur
To
Mandi
To
Kabul
To
Ludhiana
To
Bhatinda
K
a
r
a
k
o
r
a
m
R
a
n
g
e
T
h
a
r
D
e
s
e
r
t
H
i
n
d
u
K
u
s
h
Centra
l M
a
k
r
a
n
R
a
n
g
e
K2
(Mt. Godwin-
Austen)
(8,611 m)
35N
30N
25N
30N
25N
65E 70E 75E
65E 70E 75E
PAKISTAN
0 50 100 150
0 50 100 150 Miles
200 Kilometers
IBRD 33460R
NOVEMBER 2010
PAKI STAN
SELECTED CITIES AND TOWNS
PROVINCE CAPITALS
NATIONAL CAPITAL
RIVERS
This map was produced by
the Map Design Unit of The
World Bank. The boundaries,
colors, denominations and
any other information shown
on this map do not imply, on
the part of The World Bank
Group, any judgment on the
legal status of any territory,
or any endor s ement or
a c c e p t a n c e o f s u c h
boundaries.
MAIN ROADS
RAILROADS
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES