Q1- Write Short notes on the following.

1- IMF
2- Time Value of Money
3- World Bank
4- WTO
5- Banking reforms in Pakistan
ANSWER#

 1) : IMF:- The International Monetary Fund (IMF) is an international organization,

headquartered in  WASHINGTON D-C, consisting of 189 countries working to foster global
monetary cooperation, secure financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce poverty around the world while
periodically depending on the World Bank for its resources.
( Formed in 1944 )

The current Managing Director (MD) and Chairwoman of the IMF is Bulgarian economist
chrristalina Georgieva . who has held the post since October 1, 2019. Gita was appointed as
Chief Economist of IMF from 1 October 2018. Prior to her IMF appointment she was
economic adviser to the Chief Minister of Kerala India.

2)Time value of Money:

The time value of money (TVM) is the concept that
money you have now is worth more than the identical sum in the future
due to its potential earning capacity. This core principle of finance holds
that provided money can earn interest, any amount of money is worth
more the sooner it is received. TVM is also sometimes referred to as
present discounted value.

FV = Future value of money

 PV = Present value of money
 i = interest rate
 n = number of compounding periods per year
 t = number of years

Based on these variables, the formula for TVM is:

FV = PV x [ 1 + (i / n) ] (n x t)
3) World Bank :-

The World Bank is an international organization dedicated to providing financing,

advice, and research to developing nations to aid their economic advancement.
The bank predominantly acts as an organization that attempts to fight poverty by offering
developmental assistance to middle- and low-income countries.

The World Bank is an international financial institution that provides loans and grants to the
governments of poorer countries for the purpose of pursuing capital projects.

current president of bank is David Malpass

4) WTO :-
The World Trade Organization (WTO) is an intergovernmental organization that is
concerned with the regulation of international trade between nations. The WTO officially commenced
on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994,
replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the
largest international economic organization in the world.

The WTO deals with regulation of trade in goods, services and intellectual property between
participating countries by providing a framework for negotiating trade agreements and a dispute
resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed
by representatives of member governments

5- Banking reforms in Pakistan :-

Pakistan nationalized its domestic banks in the mid 1970s. Since then, state-owned
credit and saving institutions have held a dominant role in the financial sector. It was in
the late 1980s that banking sector reforms were initiated under broader macroeconomic
structural adjustment programs
The State Bank of Pakistan (SBP) has four major functions to perform under the law:
• Ensuring Soundness of the Financial Sector.
• Maintaining Price Stability with Growth.
• Prudent Management of the Exchange Rate.
• Strengthening of the Payment System.

Q2- CPEC is considered as the opportunity provider project in

Pakistan's perspective. Discuss the how will the success of CPEC will
effect Money situation and value of Pakistani currency? How will be
the banking sector benefited through this project? What will be the
role of CPEC in economic betterment of Pakistan? 

ANSWER#

introduction :-
One of the common reservations expressed about CPEC is that it lacks transparency and
non‐availability of complete information. The terms and conditions of financing at which
the Chinese companies are participating in these projects are not fully known and the
likely future financing burden on Pakistan’s balance of payments is not obvious. This
booklet attempts to address some of these issues to the extent that the projects have
been planned, agreed upon, finalized and implementation is under way. Only
approximately half of $ 45 billion committed originally for CPEC would be utilized for
these projects. Pakistan’s liability is therefore at present limited to this $ 23‐25 billion
only. Many other projects are at feasibility stage, discussion or negotiation stage between
the two governments or on hold. No amount has either been committed or disbursed for
these projects and the liability of Pakistan has not yet arisen.
It must be kept in mind that the planning of CPEC follows four stages and frim information
would flow only when we reach that stage.

These stages are:

(i) Early Harvest 2015‐2019 Most of the projects relate to Energy sector which are
already completed or expected to be completed by 2019 adding approximately 7000
MW electricity to national grid and thus easing the energy shortages and load
shedding that had crippled the industry and exports.

(ii) Short term projects up to 2022 mainly Roads, Gwadar Development, Optic fiber
network and the Hydel, coal mining and power projects
(iii) Medium projects up to 2025 Railways and Industrial zones
(iv) Long term projects up to 2030 Completion of Industrial zones, Agriculture, Tourism
etc.

Impact of CPEC on Pakistan economy :-

With the establishment of all power projects by 2020 and energy imports by energy
tunnels will increase the energy supply security in Pakistan. With this supply of
energy, CPEC is expected to add 2.5% into the current GDP and its growth to 7.5% .
How much Pakistan will earn from CPEC:-

Official statistics suggested a return of US$6 billion to 8 billion from taxes per annum
such as road and bridge tolls. The total CPEC loan is 6% of Pakistan's GDP, however
the Indian Government has claimed the project a debt-trap.

Banking Sector Expects Benefits with CPEC Investments in Pakistan :-

Pakistan’s banks are likely to have their potential share in the development projects
under China Pakistan Economic Corridor (CPEC) which will generate a new stream
of revenues for them in the future

 The GDP growth of Pakistan will settle more than 5 percent in the current financial
year on the stable macro-economic indicators.

Dima Jardaneh, Executive Director, Head, MENA Economic Research said the global
economy may take twist with the likely rebound of the international market which can
affect over the growth of different economies across the world.

She said the US policy after new president Donald Trump is likely to be stable in near
future however gradual effect could be seen in coming years.

CPEC Role:-

Several years after its launch, the CPEC has laid a foundation for

sustainable economic development through infrastructure improvement. ... At its second
stage, the CPEC will play a bigger role in Pakistan's economy as the project focuses
more on manufacturing and agriculture.