Spring, 2024

ECO104: Principles of Macroeconomics

Chapter 6

Week-05
Adnan Haider
 National Income Accounting Framework
• Assume national income equals GDP, and thus use terms
income and output interchangeably (convenience)
• Begin with a simple economy: closed economy with no
public sector  output expressed as Y  C  I
• Only two things can do with income:
Y  C  Sconsume and save
 national income expressed as , where S is
private savings   I  Y  C
C   S
• Combine them: demand (6)
income

I Y C  S
• Rearrange: , or investment = savings
• In closed economy, new capital can only be built by
postponing consumption  saving
 Some Identities: Adding G and NX
• When we add the government and the foreign sector,
the fundamental identity becomes Y  C  I  G  NX
• Disposable (after-tax) income: YD  Y  TR  TA
– where TR = transfer payments and TA = taxes

• YD is split between C and S: YD  C  S

• If rearrange and substitute for Y, then
YD  TR  TA  C  I  G  NX
• By substituting:
C  S  TR  TA  C  I  G  NX
• Rearranging: S  I  (G  TR  TA)  NX
TR: A transfer payment is a payment of money, usually from the government, for which there are no goods or services exchanged. For example,
{Government transfer payments include Social Security benefits, unemployment insurance benefits, and welfare payments}.
 S, I, Government Budget, and
Trade
S  I  (G  TR  TA )   NX
      TradeSurplus
BudgetDeficit

– G + TR is total government expenditure and TA is government

income (or revenues)
• Excess of savings over investment (S > I) in the private
sector is equal to the government budget deficit plus the
trade surplus
• Private sector can dispose of savings in three ways:
1. Make loans to the government
2. Lend to foreigners
3. Lend to firms who use the funds for I
• When savings and investment are approximately equal,
government deficit tends to lead to trade deficit
Did GDP really increase?

GDP = (Price of oranges 

Quantity of oranges)
+ (Price of
coconuts  Quantity of
coconuts) + (Price of pizzas 
Quantity of pizzas)
 Problems of GDP Measurement
• There are three major problems with measuring GDP:
1. Omits non-market goods and services
– Ex. Work of stay-at-home mothers and fathers not included in GDP
– Government services not always evaluated at market-clearing prices
2. No accounting for “bads” such as crime and pollution
– Ex. Crime and pollution are detrimental to society, but there is no subtraction
from GDP to account for it
3. No correction for quality improvements
– Ex. PC are cheaper at present than 20 yrs ago despite being much faster and
more powerful

• Despite these drawbacks, GDP is still considered one of

the best economic indicators for estimating growth in
an economy
Measuring Macroeconomic Activity

Some more linkages

Measuring Macroeconomic Activity
Until this slide, we have discussed!!!

From GDP to GNP: Accounting for Trade in Factor Services

• Gross national income equals gross domestic product (GDP)

plus net factor income from abroad (NFIA).

GNI  GNP  C  I G  ( EX  IM )  ( EX FS  IM FS )
              
Gross national expenditure Trade balance Net factor income from abroad
GNE TB NFIA
           
GDP
Measuring Macroeconomic Activity
The Flow of Payments in an Open Economy: Incorporating the
Balance of Payments Accounts
The current
account (CA) is a
tally of all
international
transactions in
goods, services,
and income
(occurring
through market
transactions or
transfers).
Measuring Macroeconomic Activity
The Flow of Payments in an Open Economy: Incorporating the
Balance of Payments Accounts
• Gifts may take the form of income transfers or “in kind” transfers of
goods and services. They are considered nonmarket transactions, and are
referred to as unilateral transfers.
• Net unilateral transfers (NUT) equals the value of unilateral transfers the
country receives from the rest of the world minus those it gives to the
rest of the world.
• If a country receives transfers worth UTIN and gives transfers worth UTOUT,
then its net unilateral transfers, NUT, are NUT = UTIN − UTOUT. Because this is
a net amount, it may be positive or negative.
• Adding the impact of net unilateral transfers to gross national Income, we
obtain a full measure of national income in an open economy, known as
gross national disposable income (GNDI), henceforth denoted Y:
  CI 
Y

G   ( EX  IM )  ( EX FS  IM FS )  (UT  UT )
               
GNDI
GNE Trade Net factor income
balance from abroad Net unilateral
(TB ) ( NFIA ) transfers
                 (NUT )
GNI
Measuring Macroeconomic Activity
The Flow of Payments in an Open Economy: Incorporating the
Balance of Payments Accounts
• These net transfers have to be added to GNI to calculate
gross national disposable income (GNDI). Thus, GNI plus NUT
equals GNDI, which represents the total income resources
available to the home country.
 Measuring Macroeconomic Activity
From GNI to GNDI: Accounting for Transfers of Income
HEADLINES
Are Rich Countries “Stingy” with Foreign
Aid?
The Asian tsunami on December 26, 2004, was one of the
worst natural disasters of modern times. Hundreds of
An Indonesian soldier
thousands of people were killed and billions of dollars of thanks two U.S. airmen
damage was done. Some aftershocks were felt in after a U.S. Navy
helicopter delivered
international politics. Jan Egeland, UN undersecretary fresh water to
general for humanitarian affairs and emergency relief, Indonesian tsunami
declared, “It is beyond me why we are so stingy.” His victims. The normal
operating costs of
comments rocked the boat in many rich countries, military assets used for
especially in the United States where official aid fell short of humanitarian purposes
are not fully counted as
the UN goal of 0.7% of GNI. However, the United States part of official
gives in other ways, making judgments about stinginess far development
from straightforward. assistance.
Remember!!!
 Stocks vs. Flows
Flow Stock

Examples:
stock flow
a person’s wealth a person’s saving
# of people with # of new college
college degrees graduates
the govt. debt the govt. budget deficit
The flow variables have been measured throughout time (i.e. per hour, per week, per month, or per year).
 GDP is a Flow Concept
• The store of wealth, in contrast, is a stock
concept.
• The stock equivalent to national income
accounts is the national balance sheet – a
balance sheet of an economy’s stock of assets
and liabilities.
 GDP Measures Final Output
• GDP does not measure total transactions in
the economy.
• It counts final output but not intermediate
goods.
• Final output – goods and services purchased
for final use.
• Intermediate products are used as inputs
in the production of some other product.
 Two Ways of Eliminating Intermediate
Goods
• There are two ways of eliminating
intermediate goods.
• The first is to calculate only final sales.
• A second way is to follow the value added
approach.
 Value added is the increase in value that a firm
contributes to a product or service.
 It is calculated by subtracting intermediate goods
from the value of its sales.
 Value Added Approach Eliminates
Double Counting
Participants Cost of Value of Value Added
Materials Sales
Farmer $ 0 $ 100 $ 100
Cone factory 100 250 150
and ice
cream-maker
Middleperson 250 400 150
Vendor 400 500 100
Totals $ 750 $1,250 $500
 Calculating GDP: Some Examples
• Selling your car to a neighbor does not add to
GDP.
• Selling your car to a used car dealer who sells
your car to someone else for a higher price,
does add to GDP.
• The value added is the dealer's services.
 Calculating GDP: Some Examples
• Selling a stock or bond does not add to GDP.

 The stock broker's commission for the

sales does add to GDP.
 The Circular Flow
Wages, rents, interest,
profits

Factor services

Goods
Firms (production)
Household t
v ern men
Taxes Government Go nding
Spe
Savin
gs es tm ent
Financial markets In v
Imp Personal consumption
orts
rts
Expo
Other countries
 ~Typical Macro-Linkages~
price
world
level lag 1
interest
world IMPORTS
rate
GDP

inflation
lag 1
world EXPORTS
price
EXCHANGE RATE
PRICE
LEVEL
NET
money EXPORTS
INTEREST RATE

INFLATION
government

INVESTMENT

REAL GDP
EXPECTED
INFLATION

UNEMPLOYMENT
CONSUMPTION

tax DISPOSABLE INCOME

TAX REVENUES POTENTIAL GDP
rate

capital stock
investment
lag 1 CAPITAL STOCK
lag 1 labor force
Measuring Macroeconomic Activity

Income Approach
 Gross Domestic Product
• The income approach to measuring GDP
– Adds up income generated by production (including profits and taxes
paid to the government)
• National income = compensation of employees (including benefits) +
proprietor's income + rental income of persons + corporate profits + net
interest
• National income + indirect business taxes = net national product
• Net national product + depreciation = gross national product (GNP)
• GNP - net factor payments (NFP) = GDP
– Private sector and government sector income
• Private disposable income = income of the private sector = private sector
income earned at home (Y or GDP) and abroad (NFP) + payments from the
government sector (transfers, TR, and interest on government debt, INT) -
taxes paid to government (T) = Y + NFP + TR + INT - T
• Govt's net income = taxes - transfers - interest payments = T - TR - INT
• Private disposable income + government’s net income = GDP + NFP = GNP

2-24
Table 2.2 Income Approach to Measuring GDP in the United States
 Saving and Wealth
• Wealth
– Household wealth = a household's assets minus its
liabilities
– National wealth = sum of all households’, firms’,
and governments’ wealth within the nation
– Saving by individuals, businesses, and government
determine wealth
 Saving and Wealth
• Measures of aggregate saving
– Saving = current income - current spending
– Saving rate = saving / current income
– Private saving = private disposable income - consumption
Spvt = (Y + NFP - T + TR + INT) - C
– Government saving = net government income - government purchases of goods and
services, i.e., Sgovt = (T - TR - INT) - G
• Government saving = government budget surplus = govt receipts - govt outlays
• Government receipts = tax revenue (T)
• Government outlays = government purchases of goods and services (G) + transfers
(TR) + interest payments on government debt (INT)
• Government budget deficit = -Sgovt
• Despite the BEA's change in methods that explicitly recognize government investment,
the text simplifies matters by counting government investment as government
purchases, not investment. This avoids complications when the concepts are
introduced and can be modified for further analysis later.
– National saving
• National saving = private saving + government saving
• S = Spvt + Sgovt = [Y + NFP - T + TR + INT - C] + [T - TR - INT - G]
= Y + NFP - C - G = GNP - C - G
 Saving and Wealth
• The uses of private saving
– S = I + (NX + NFP) = I + CA
Derived from S = Y + NFP - C - G and Y = C + I + G + NX
CA = NX + NFP = current account balance
– Spvt = I + (-Sgovt) + CA {using S = Spvt + Sgovt}
The uses-of-saving identity—saving is used in three ways:
• investment (I)
• government budget deficit (-Sgovt)
• current account balance (CA)
• Relating saving and wealth
 Saving and Wealth
• Relating saving and wealth
– Stocks and flows
• Flow variables: measured per unit of time (GDP,
income, saving, investment)
• Stock variables: measured at a point in time (quantity
of money, value of houses, capital stock)
• Flow variables often equal rates of change of stock
variables
– Wealth and saving as stock and flow (wealth is a
stock, saving is a flow)
 Saving and Wealth
– National wealth
• Country’s domestic physical assets (capital goods and land)
• Country’s net foreign assets = foreign assets (foreign stocks, bonds,
and capital goods owned by domestic residents) minus foreign
liabilities (domestic stocks, bonds, and capital goods owned by
foreigners)
• Changes in national wealth
– Change in value of existing assets and liabilities (change in price of
financial assets, or depreciation of capital goods)
– National saving (S = I + CA) raises wealth
• Comparison of U.S. saving and investment with other countries
– The United States is a low-saving country; Japan is a high-saving
country
– U.S. investment exceeds U.S. saving, so we have a negative current-
account balance
 APPLICATION
Global Imbalances

Saving, Investment, and Current Account Trends: Industrial Countries The charts show saving,
investment, and the current account as a percent of each subregion’s GDP for four groups of
advanced countries. The United States has seen both saving and investment fall since 1980, but
saving has fallen further than investment, opening up a large current account deficit approaching
6% of GDP in recent years.
Japan’s experience is the opposite: investment fell further than saving, opening up a large current
account surplus of about 3% to 5% of GDP.
 APPLICATION
Global Imbalances

Saving, Investment, and Current Account Trends: Industrial Countries (continued) The Euro area
has also seen saving and investment fall but has been closer to balance overall.
Other advanced countries (e.g., non-Euro area EU countries, Canada, Australia, etc.) have tended
to run large current account deficits.
 APPLICATION
Global Imbalances
• We define private saving Sp as that part of after-tax private
sector disposable income Y that is not devoted to private
consumption C. Hence, private saving Sp is
Sp  Y  T  C
• We define government saving as the difference between tax
revenue T received by the government and government
purchases G. Hence, government saving Sg equals
Sg  T  G
• 
Private saving plus government saving equals total national
saving, since

S  Y  C  G  (Y  T  C )  (T  G )  S p  Sg
       
Private saving Government saving
 APPLICATION
Global Imbalances

Private and Public Saving

Trends: Industrial
Countries This chart shows
private saving and the
chart on the next slide
public saving, both as a
percent of GDP. Private
saving has been declining
in the industrial countries,
especially in Japan (since
the 1970s) and in the
United States (since the
1980s). Private saving has
been more stable in the
Euro area and other
countries.
 APPLICATION
Global Imbalances

Private and Public Saving

Trends: Industrial
Countries
(continued)
Public saving is clearly
more volatile than private
saving. Japan has been
mostly in surplus and
massively so in the late
1980s and early 1990s.
The United States briefly
ran a government surplus
in the late 1990s but has
now returned to a deficit
position.
 APPLICATION
Global Imbalances
Do government deficits cause current account deficits?
Sometimes they do go together, but these “twin deficits” are not
inextricably linked, as is sometimes believed. We can use the
equation just given and the current account identity to write

CA  S p  Sg  I
The theory of Ricardian equivalence asserts that a fall in public
saving is fully offset by a contemporaneous rise in private saving.
However, empirical studies do not support this theory: private
saving does
 not fully offset government saving in practice.
 APPLICATION
Global Imbalances

Global Imbalances
The charts show saving
(blue), investment (red),
and the current account
(yellow) as a percent of
GDP.
 APPLICATION
Global Imbalances

Global Imbalances
(continued)
In the 1990s, emerging
markets moved into
current account surplus
and thus financed the
overall trend toward
current account deficit of
the industrial countries.
Note: Oil producers
include Norway.
 APPLICATION
Global Imbalances

Global Imbalances
(continued)
For the world as a whole
since the 1970s, global
investment and saving
rates have declined as a
percent of GDP, falling
from a high of near 26% to
low near 20%.
 APPLICATION
Global Imbalances
Do government deficits cause current account deficits?
Sometimes they do go together, but these “twin deficits” are not
inextricably linked, as is sometimes believed. We can use the
equation just given and the current account identity to write

CA  S p  Sg  I
The theory of Ricardian equivalence asserts that a fall in public
saving is fully offset by a contemporaneous rise in private saving.
However, empirical studies do not support this theory: private
saving does
 not fully offset government saving in practice.
 The Balance of Payments
Accounting for Asset Transactions: the Capital Account

• The capital account (KA) covers two remaining areas of asset

movement of minor quantitative significance.
• One is the acquisition and disposal of nonfinancial,
nonproduced assets (e.g., patents, copyrights, trademarks,
franchises, etc.).
• The other important item in the capital account is capital
transfers (i.e., gifts of assets), an example of which is the
forgiveness of debts.
• We denote capital transfers received by the home country as
KAIN and capital transfers given by the home country as KAOUT.
The capital account, KA = KAIN − KAOUT, denotes net capital
transfers received.
 The Balance of Payments
Accounting for Home and Foreign Assets

• From the home perspective, a foreign asset is a claim on a

foreign country. When a home entity holds such an asset, it is
called an external asset of the home country.
• When a foreign entity holds such an asset, it is called an
external liability of the home country because it represents
an obligation owed by the home country to the rest of the
world.
Measuring Macroeconomic Activity
The Flow of Payments in an Open Economy: Incorporating the
Balance of Payments Accounts
• The value of asset exports minus asset imports is called the
financial account (FA). These net asset exports are added to
home GNDI when calculating the total resources available for
expenditure in the home country.
 Measuring Macroeconomic Activity
The Flow of Payments in an Open Economy: Incorporating the
Balance of Payments Accounts
• A country may not only buy and sell assets but also transfer
assets as gifts. Such asset transfers are measured by the
capital account (KA), which is the value of capital transfers
from the rest of the world minus those to the rest of the
world.
Measuring Macroeconomic Activity
The Open Economy Measurements of
national expenditure, product, and
income are recorded in the national
income and product accounts, with the
major categories shown on the left.

Measurements of international
transactions are recorded in the balance
of payments accounts, with the major
categories shown on the right.

The purple line shows the flow of

transactions within the home economy.

The green lines show all cross-border

transactions.
 The Balance of Payments
Accounting for Home and Foreign Assets

The Double-Entry Principle in the Balance of Payments

Summary of hypothetical international transactions
1. CA: Drinks in Paris bar −IM −$110
FA: Bar’s claim on AMEX +EXH +$110
A
2. CA: Arkansas wine exported to EX +$36
Denmark
CA: Jutland wine imported to −IM −$36
United States

3. FA: George’s French tech stocks IMF −$10,000

A

FA: BNP claim against +EXH A −IM +$10,000

Citibank
 The Balance of Payments
Accounting for Home and Foreign Assets

The Double-Entry Principle in the Balance of Payments

Summary of hypothetical international transactions
(continued)
4. CA: Relief supplies exported −IM +$5,000
to Bam
CA: George’s charitable gift −UTOUT −$5,000

5. KA: U.S. grant of debt relief −KAOUT −$1,000,000,000

FA: Decline in U.S. external assets −EXF −$1,000,000,000
A
 The Balance of Payments
Accounting for Home and Foreign Assets
• If we use superscripts “H” and “F” to denote home and
foreign assets, we can break down the financial account as
the sum of the net exports of each type of asset:
FA  ( EX AH  IM AH )  ( EX AF  IM AF )  ( EX AH  IM AH )  ( IM AF  EX AF )
                       
Net export of home assets Net export of foreign assets Net export of home assets Net import of foreign assets
= =
Net additionsto Net additionsto
external liabilities external assets

• FA equals the additions to external liabilities (the home-

owned assets moving into foreign ownership, net) minus the
additions to external assets (the foreign-owned assets
moving into home ownership, net).
 The Balance of Payments
How the Balance of Payments Accounts Work:
A Macroeconomic View
• Recall that gross national disposable income is
Y  GNDI  GNE  TB  NFIA  NUT     CA
GNE 
Resources available
to home country from income

• In addition, the home economy can free up (or use up)

resources in another way: by engaging in net sales (or
purchases) of assets. We can calculate these extra resources
using our previous definitions:
[ EX A  KAOUT ]  [ IM A  KAIN ]  EX A  IM A  KAIN  KAOUT    
FA KA
    
Value of Value of Value of Value of Extra resources available
all assets all assets all assets all assets to the home country
exported exported imported imported due to asset trades
as gifts
      as gifts
     
Value of Value of
all assets exported via sales all assets imported via purchases
 The Balance of Payments
How the Balance of Payments Accounts Work:
A Macroeconomic View
• Adding the last two expressions, we arrive at the value of the
total resources available to the home country for
expenditure purposes. This total value must equal the total
value of home expenditure on final goods and services, GNE:

   CA
GNE     
FA KA  GNE
Resources available Extra resources available
to home country due to income to the home country
due to asset trades
• We can cancel GNE from both sides of this expression to
obtain the important result known as the balance of
payments identity or BOP identity:

CA
 + KA
 + FA
 = 0
Current account Capital account Financial account
 The Balance of Payments
How the Balance of Payments Accounts Work:
A Microeconomic View
• The components of the BOP identity allow us to see the
details behind why the accounts must balance.
CA  (EX  IM )  (EX FS  IM FS )  (UT UT )
KA  (KA  KA )
FA  (EX AH  IM AH )  (EX AF  IM AF ) (5-13)
• If an item has a plus sign, it is called a balance of payments
credit or BOP credit.
• If an item has a minus sign, it is called a balance of payments
 debit or BOP debit.
 The Balance of Payments
How the Balance of Payments Accounts Work:
A Microeconomic View
• We have to understand one simple principle: every market
transaction (whether for goods, services, factor services, or
assets) has two parts. If party A engages in a transaction
with a counterparty B, then A receives from B an item of a
given value, and in return B receives from A an item of equal
value.
 The Balance of Payments
Understanding the Data for the Balance of Payments Account

The U.S. Balance of Payments in 2009

The table shows U.S. international transactions in 2009 in billions of dollars. Major categories are
in bold type.
 The Balance of Payments
Understanding the Data for the Balance of Payments Account

The U.S. Balance of Payments in 2009 (continued)

The table shows U.S. international transactions in 2009 in billions of dollars. Major categories are
in bold type.
 The Balance of Payments
Understanding the Data for the Balance of Payments Account

The U.S. Balance of Payments in 2009 (continued)

The table shows U.S. international transactions in 2009 in billions of dollars. Major categories are
in bold type.
 The Balance of Payments
Understanding the Data for the Balance of Payments Account

• A country that has a current account surplus is called a (net)

lender. By the BOP identity, we know that it must have a
deficit in its asset accounts, so like any lender, it is, on net,
buying assets (acquiring IOUs from borrowers). For example,
China is a large net lender.
• A country that has a current account deficit is called a (net)
borrower. By the BOP identity, we know that it must have a
surplus in its asset accounts, so like any borrower, it is, on
net, selling assets (issuing IOUs to lenders). As we can see,
the United States is a large net borrower.
 The Balance of Payments
Some Recent Trends in the U.S. Balance of Payments
FIGURE 5-10
U.S. Balance of Payments
and Its Components,
1990–2009
The figure shows the
current account balance
(CA), the capital account
balance (KA, barely
visible), the financial
account balance (FA), and
the statistical discrepancy
(SD), in billions of dollars.
 The Balance of Payments
What the Balance of Payments Account Tells Us
• The balance of payments accounts consist of the current
account, which measures external imbalances in goods,
services, factor services, and unilateral transfers. The
financial and capital accounts measure asset trades.
• Surpluses on the current account side must be offset by
deficits on the asset side. Similarly, deficits on the current
account must be offset by surpluses on the asset side. By
telling us how current account imbalances are financed, the
balance of payments makes the connection between a
country’s income and spending decisions and the evolution
of that country’s wealth.
 External Wealth
• Just as a household is better off with higher wealth, all else
equal, so is a country.
• We can calculate a home country’s “net worth” or external
wealth with respect to the rest of the world (ROW) by adding
up all of the home assets owned by ROW (foreigners’ claims
against home) and then subtracting all of the ROW assets
owned by the home country (home claims against
foreigners).
• In 2009, the United States had an external wealth of about –
$2,866 billion. This made the United States the world’s
biggest debtor in history at the time of this writing.
 External Wealth
The Level of External Wealth
• The level of a country’s external wealth (W) equals
 ROW assets   Home assets 
External    = owned by home   owned by ROW
    wealth
W                 
A L

• A country’s level of external wealth is also called its net

international investment position or net foreign assets. It is a
stock measure, not a flow measure.
If W > 0, home is a net creditor country: external assets
exceed external liabilities.
If W < 0, home is a net debtor country: external liabilities
exceed external assets.
 External Wealth
Changes in External Wealth
• There are two reasons a country’s level of external wealth
changes over time.
1. Financial flows: As a result of asset trades, the country
can increase or decrease its external assets and liabilities.
Net exports of home assets cause an equal increase in the
level of external liabilities and hence a corresponding
decrease in external wealth.
2. Valuation effects: The value of existing external assets
and liabilities may change over time because of capital
gains or losses.
In the case of external wealth, this change in value could
be due to price effects or exchange rate effects.
 External Wealth
Changes in External Wealth
• Adding up these two contributions to the change in external
wealth (ΔW), we find
 Change in  Financial  Capital gains on 
external wealth     account    external wealth 
                     
W Net export of assets Valuation effects
= =
FA Capital gains minus capital losses
• Since −FA = CA + KA,

 Change in   Current   Capital  Capital gains on 

external wealth   account   account    external wealth 
                           
W CA KA Valuation effects
= = =
Unspent Net capital Capital gains
income transfers received minus capital losses
 External Wealth
Understanding the Data on External Wealth

U.S. External Wealth in 2008–2009

The table shows changes in the U.S. net international investment position during the year 2009
in billions of dollars. The net result in row 3 equals row 1 minus row 2.
 External Wealth
Understanding the Data on External Wealth

U.S. External Wealth in 2008–2009 (continued)

The table shows changes in the U.S. net international investment position during the year 2009
in billions of dollars.
 External Wealth
Understanding the Data on External Wealth

U.S. External Wealth in 2008–2009 (continued)

The table shows changes in the U.S. net international investment position during the year 2009
in billions of dollars. The net result in row 3 equals row 1 minus row 2.
 External Wealth
Some Recent Trends
• In the case of the United States, for the past three decades,
the financial account has been almost always in surplus,
reflecting a net export of assets to the rest of the world to pay
for chronic current account deficits.
• If there were no valuation effects, then the change in the level
of external wealth between two dates should equal the
cumulative net import of assets (minus the financial account)
over the intervening period.
• But valuation effects or capital gains can generate a significant
difference in external wealth. From 1988 to 2009 these
effects reduced U.S. net external indebtedness in 2009 by
more than half compared with the level that financial flows
alone would have predicted.
 External Wealth
What External Wealth Tells Us
• External wealth data tell us the net credit or debit position of
a country with respect to the rest of the world.
• They include data on external assets (foreign assets owned by
the home country) and external liabilities (home assets owned
by foreigners). A creditor country has positive external wealth,
a debtor country has negative external wealth.
• Countries with a current account surplus (deficit) must be net
buyers (sellers) of assets.
• An increase in a country’s external wealth results from every
net import of assets; conversely, a decrease in external wealth
results from every net export of assets.
 External Wealth
What External Wealth Tells Us
• In addition, countries can experience capital gains or losses on
their external assets and liabilities that cause changes in
external wealth.
• All of these changes are summarized in the statement of a
country’s net international investment position.
SBP’s Macroeconomic Framework and
Projections
Framework concept and technique – a brief intro

 SBP’s macroeconomic framework is based on IMF’s financial programming technique

 Financial programming is not a formal economic model. Instead, it is the formulation

of an integrated framework of macroeconomic accounts covering four sectors (real,
external, fiscal, and monetary) of economy . It provides the information essential to
assess the performance of an economy and the need for policy adjustments.

 It combines basic macro-accounting identities, a small number of behavioural

equations, and certain country specific factors. This accounting framework allows the
policy makers to check the consistency of projections/programs within and across
different sectors of the economy, as many entries in one sector account are related
to entries in other sectors accounts.
Interrelationships among macroeconomic accounts
REAL SECTOR FISCAL SECTOR
National Accounts
Public Finance
• Private consumption General government consumption •Revenues
• Private investment General government investment • Tax revenue
• Non-tax revenue
• Exports of goods and nonfactor services •Expenditures
• Imports of goods and nonfactor services • Current
• Developmental
•Overall balance
EXTERNAL SECTOR •Financing
• Domestic financing (net)
Balance of Payments • Banking system
CURRENT ACCOUNT • Nonbanking sector
•Exports of goods and nonfactor services • External financing (net)
•Imports of goods and nonfactor services
•Income account (net)
• CSF Money
MONETARY SECTOR
•Transfers (net) Banking system
• Official •Net foreign assets
• Private
•Net domestic assets:
CAPITAL & FINANCIAL ACCOUNT • Net claims on government
• Foreign direct investment • Budgetary support
• Foreign portfolio investment • Commodity operations
•Other investments • Claims on non-government
• Net official inflows • Credit to private sector
• Private sector enterprises
Overall balance • Other items (net)
Changes in foreign exchange reserves
State Bank of Pakistan
•Net foreign assets
Pakistan’s Debt Profile •Net domestic assets:
•Total debt • Net claims on government
• Government sector debt • Budgetary support
• Domestic debt • Claims on non-government
• External debt • Other items (net)
• PSE’s debt Liabilities to monetary authorities
• Private sector external debt • Currency in circulation
• Country’s debt from IMF • Private sector deposits

Accounting identities
Strong accounting relationships
Preparation of macroeconomic outlook – process
and timelines
 While improving the framework is a continuous process, updating of projections
begins around the mid of each month.

 Inflation outlook forecasts are used, as proxy of GDP deflator, for updating nominal
GDP projections, while trade outlook forecasts are used for the projections of
external current account balance.

 Quarterly exchange rate misalignment exercise provides exchange rate assumptions,

but unlike former latter are also revisited monthly on basis of trend analysis.

 Projections of other key variables are mostly based on trend and seasonality
analysis, available information set, and assumptions.

 Consistent quarter-wise projections of key variables including debt and liabilities

(except real sector variables that is annual) is updated by 23rd of each month.
Presentation Format of Framework Projections
 Output of macroeconomic framework is provided on monthly basis. It consists of six detailed
projection tables, a brief write-up on projections, ten annexures, and a flow of fund table.

 The six projection tables are categorised according to the area they pertain, e.g. real,
external, fiscal, monetary, and Pakistan’s debt and liabilities.

 These tables carry the actual position of a sector till date along with SBP’s projections of
that sector for ongoing fiscal year and next fiscal year. Furthermore these tables also
provide the comparative projections of IMF for ongoing fiscal year.

 Write-up explains in brief the rational behind the projections of every sector, by discussing
broad indicators of every sector

 Annexures show the historical data series along with graphs of different areas

 Flow of fund table is a consistency check on the projections. It helps in establishing that
the projections prepared for all the sectors are consistent with each other.
 Projections of External Sector
Heads Projection Basis
Current Account
Trade Export and Import projections are taken from "Trade Outlook"
Services
Transport & Insurance Based on projections of Exports and Imports
Official Based on information provided by MOF & EAD
Income Account Based on recent trends
Interest linked with our external debt projections and interest rate assumptions
Current transfers
Government Based on information provided by MOF & EAD
WR Based on current trends, news items, policy measures announced and
economic situation of source countries for remittances
Capital Account
Official Account Mainly based on information provided by MOF and EAD, but SBP projections
deviate from these numbers due to news updates and other information
Financial Account
FDI Recent Trends, government policies, and law & order situation etc
FPI SCRA A/C and news related to capital and equity market
Official Inflows Based on information provided by MOF & EAD

 Projections prepared in BOP of official inflows, trade, and official reserves are used
in the projection of fiscal, real, and monetary sectors.
 Projections of External Sector
Projections of External Sector
million US$
Items FY09 July-March FY10 Actual FY10 SBP Projections FY11 SBP
FY09 FY10 Q1 Q2 Q3 Q4 Year Proj
I. Current account balance (a+b+c+d) -9,252 -8,379 -2,702 -587 -1,548 -567 -2,103 -4,805 -8,343
a. Trade Balance (i-ii) -12,627 -10,262 -8,024 -2,809 -2,978 -2,237 -3,459 -11,483 -12,480
i. Goods: Exports f.o.b 19,121 14,321 14,389 4,620 4,678 5,091 4,923 19,312 20,470
YoY growth -6.4 13.6 0.5 -19.1 6.8 20.3 2.6 1.0 6.0
ii. Goods: Imports f.o.b 31,747 24,582 22,413 7,429 7,656 7,328 8,382 30,795 32,950
YoY growth -10.3 13.1 -8.8 -27.4 -5.2 16.8 17.0 -3.0 7.0
b. Services (net), of which -3,381 -2,951 -1,907 -718 -831 -358 -223 -2,130 -3,053
CSF money 912 465 349 0 0 349 1,000 1,349 1,200
c. Income (net) -4,407 -3,352 -2,268 -679 -893 -696 -915 -3,183 -3,702
d. Current transfers (net) 11,163 8,186 9,497 3,619 3,154 2,724 2,494 11,991 10,892
of which: Worker's remittances 7,811 5,658 6,551 2,331 2,199 2,021 1,900 8,451 8,300
Items July-March FY10 SBP FY11 SBP
FY09 P
FY10 Actual Projections 1 Proj1
FY09 FY10* Q1 Q2 Q3 Q4 Year

I. Current account balance -9,252 -8,379 -2,702 -587 -1,548 -567 -2,103 -4,805 -8,343
(a+b+c+d)
a. Trade Balance (i-ii) -12,627 -10,262 -8,024 -2,809 -2,978 -2,237 -3,459 -11,483 -12,480

i. Goods: Exports f.o.b 19,121 14,321 14,389 4,620 4,678 5,091 4,923 19,312 20,470

YoY growth -6.4 13.6 0.5 -19.1 6.8 20.3 2.6 1.0 6.0

ii. Goods: Imports f.o.b 31,747 24,582 22,413 7,429 7,656 7,328 8,382 30,795 32,950

YoY growth -10.3 13.1 -8.8 -27.4 -5.2 16.8 17.0 -3.0 7.0

b. Services (net), of which -3,381 -2,951 -1,907 -718 -831 -358 -223 -2,130 -3,053

CSF money 912 465 349 0 0 349 1,000 1,349 1,200

c. Income (net) -4,407 -3,352 -2,268 -679 -893 -696 -915 -3,183 -3,702

d. Current transfers (net) 11,163 8,186 9,497 3,619 3,154 2,724 2,494 11,991 10,892

of which: Worker's 7,811 5,658 6,551 2,331 2,199 2,021 1,900 8,451 8,300
remittances
 Projections of External Sector
Projections of External Sector
million US$
Items FY09 July-March FY10 Actual FY10 SBP Projections FY11 SBP
FY09 FY10 Q1 Q2 Q3 Q4 Year Proj
II. Capital and financial account (III+IV) 2,363 4,421 3,724 2,882 795 47 3,247 6,971 6,991
III. Capital account 474 138 187 38 48 101 679 866 329
IV. Financial account 1,889 4,283 3,537 2,844 747 -54 2,568 6,105 6,662
a. Direct investment (net) 0 3,031 1,569 513 536 520 1,300 2,869 2,870
of which privatization receipts 0 0 0 0 0 0 800 800 133
b. Portfolio Investment (net) -1,073 -953 -190 202 61 -453 200 10 350
c. Other Investment: Assets 560 592 -257 -106 -12 -139 -119 -376 62
d. Other Investment: Liabilities 2,402 1,613 2,415 2,235 162 18 1,187 3,602 3,380
i. Monetary authorities -1 -1 1,250 1,250 0 0 0 1,250 0
ii. General government 1,900 1,288 1,302 931 219 152 1,320 2,622 3,335
iii. Banks 291 197 -77 96 -78 -95 -93 -170 -100
iv. Other sector 212 129 -60 -42 21 -39 -40 -100 145
VI. Overall Balance -6,751 -3,990 915 1,896 -381 -600 1,144 2,059 -1,352
As percent of GDP
CAB with offi cial transfers -5.6 -5.0 -1.5 -0.3 -0.9 -0.3 -1.2 -2.7 -4.2
Exports 11.5 8.6 8.0 2.6 2.6 2.8 2.7 10.7 10.4
Imports 19.1 14.8 12.5 4.1 4.3 4.1 4.7 17.1 16.8
Worker remittances 4.7 3.4 3.6 1.3 1.2 1.1 1.1 4.7 4.2
 Projections of External Sector
External Program and Project Financing For Budget for FY10
million US$
Actual SBP's Projections FY11 SBP
Q1 Q2 Q3 Q4 FY10 Proj.
Total gross inflows (A+B+C+D+E+F+G) 1,392 1,279 795 2,968 6,435 5,916
(A) Program Loans 416 320 379 1,382 2,497 2,699
(B) Project loans 208 249 161 877 1,495 3,260
(C) Grants 23 139 155 327 644 523
(D) Privatization 0 0 0 800 800 133
(E) Commodity Aid 0 0 100 0 100 0
(F) Saudi (Tokyo pledge) 0 200 0 0 200 0
(G) Budgetary financing from IMF 745 372 0 -418 699 -699
Amortization 456 866 984 633 2,939 1,925
Net External financing for Budget 936 413 -189 2,335 3,496 3,991
 Projections of Fiscal Sector
Head
1. Total Revenue
a) Tax Revenue
i) FBR tax revenue
b) Non-tax revenue
i) SBP profi t
ii) CSF money
Total expenditure
a)Current expenditure
i) Interest
ii) Defense
iii) General administration
b) Development and net lending
PSDP
Fiscal Defi cit
Financing
a) External fi nancing
b) Domestic fi nancing
i) Non-bank fi nancing
ii) Bank fi nancing
SBP
Schedule bank
c) Privatization
Factors and Methodology used in Projections
Based on budget target announced by FBR, seasonal
distribution, trade outlook, infl ation, and news items
Agreed between SBP and MOF at the start of a fi scal year
Agreed between GOP and U.S. government ( source EAD)
Based on domestic and external debt servicing projections
Recent trend, budget numbers, and news items
Recent trend, budget numbers, and news items
Recent trend, budget numbers, and news items
Diff erence of projected total revenue and expenditure
Must equal to fi scal defi cit with opposite sign
Budget numbers, BOP projections of external fi nancing
Budget numbers, monthly data of NSS, and news items
Calculated as residual
Flow for the year is considered zero because of SBA restrictions
Calculated as residual
Budget numbers, and BOP projections

 Current and development expenditure calculated in fiscal sector are used as

government expenditure and investment in real account
 Projections of Fiscal Sector
Projections of Fiscal Sector
In billion Rupees
FY09 FY10 FY10 Actual FY10 SBP Proj. FY11
Budget Q1 Q2 Q3 Q4 Year SBP's Proj
I. Total revenue (a+b) 1851 2156 428 483 519 678 2108 2392
Growth 23.4 16.5 11.3 7.4 11.1 23.4 13.9 13.6
a. Tax revenue 1331 1593 305 360 373 458 1496 1725
of which: FBR tax revenue 1157 1380 264 318 328 407 1317 1520
b. Non-tax revenue, of which 520 563 123 122 146 220 611 667
SBP Profi t 161 150 70 65 45 30 210 150
CSF Money 74 - 0 0 30 85 114 107
II. Total expenditure (a+b) 3 2531 2877 652 662 745 860 2919 3365
Growth 11.2 13.7 24.7 18.0 19.6 4.3 15.3 15.3
a. Current expenditure, of which 2042 2261 544 538 645 700 2426 2805
Interest payments 555 647 141 153 159 168 622 705
Defense expenditures 313 343 86 80 100 112 378 450
b. Development and net lending 456 616 92 124 100 160 475 560
III. Budget balance (I-II) -680 -721 -223 -180 -226 -182 -811 -973
VI. Financing (a+b+c) 680 721 224 180 226 182 812 973
a. External 150 377 77 33 -16 130 225 343
b. Domestic (i+ii) 531 344 147 146 242 -15 520 617
i. Non-bank 225 246 108 78 138 76 400 400
ii. Bank borrowings (cash basis) 306 97 39 68 104 -91 120 217
SBP 114 0 -83 19 94 -101 -71 0
Schedule Banks 192 97 122 49 10 10 191 217
c. Privatization proceeds 0 0 0 0 0 67 67 12
 Projections of Real Sector
Head Factors and Methodology used in Projections
GDP Supply Side
Nominal GDP
1) Inflation Based on the Infl ation Outlook
2) Real GDP
a) Agriculture
i) Major Crops Cropped area, water availability, seed quality, pesticides,
fertilizer, and agriculture credit
ii) Minor Crops Area under cultivation, and prices
iii) Live Stock Recent trends, fodder, loan availability
b) Industry and LSM Agricultural output in particular cotton, import prices of
raw material and electricity, and credit off take
c) Services
i) Transport, Storage and Communications Domestic fuel consumption, performance of commodity
sector, and activity level in industry
ii) Wholesale & retail trade
iii) Finance & insurance
GDP Demand Side
1) Total Domestic Demand
a) Total Consumption Expenditure
i) Private Consumption Expenditure Residual
ii) General Government Consumption Based on current expenditure from fi scal account
b) Total Investment Expenditure
i) Private Sector Based on private sector credit
ii) Public Sector plus General Government Based on development expenditure from fi scal account
2) Exports of Goods and Non- Factor Services Based on BOP projections
3) Imports of Goods and Non- Factor Services Based on BOP projections
 Projections of Real Sector
Projections of Gross Domestic Product and Inflation
In billion of Rupees; at constant factor cost of 1999-00; Growth in percent
FY10 FY11
FY09 Target / SBP Proj SBP Proj.
Budg. Est.
Real GDP (factor cost) 5,512 5,696 5,688 5,944
Growth 2.0 3.3 3.2 4.5
Agriculture 1,203 1,249 1,225 1,276
Growth 4.7 3.8 1.8 4.2
Industry 1,341 1,364 1,379 1,432
Growth -3.6 1.7 2.9 3.8
Services 2,968 3,083 3,084 3,237
Growth 3.6 3.9 3.9 5.0
As percent of GDP (factor cost)
Agriculture 21.8 21.9 21.5 21.5
Industry 24.3 24.0 24.3 24.1
Services 53.8 54.1 54.2 54.5
Average Inflation (CPI) 20.8 9.0 11.7 10.8
CPI Index (2000-01=100) 192 209 214 237
YoY Inflation (CPI) 13.1 - 12.7 9.8
CPI Index (2000-01=100) 200 - 225 247
 Projections of Real Sector
Projecti ons of Real Aggregate Demand's Components
In billion of Rupees; at constant factor cost of 1999-00
Sectors SBP Proj.
FY09
FY10 FY11
I. Total consumption expenditure (a+b) 4,671 4,737 4,972
Growth 2.2 1.4 5.0
a) Private consumpti on expenditure 4,032 4,056 4,261
b) General government consumpti on 640 681 711
II. Investment expenditure (a+b) 1,016 1,019 1,069
Growth -6.2 0.3 4.9
a) Gross domestic fi xed capital formation (i+ii) 927 929 977
i. Private sector 666 695 725
Growth -7.0 4.4 4.2
ii. Public sector plus general government 261 234 253
Growth -5.1 -10.4 8.0
b) Changes in stocks 89 90 91
III. Total domestic demand (I+II) 5,687 5,756 6,041
Growth 0.6 1.2 4.9
IV. Exports of goods and non-factor services 1,020 1,049 1,077
V. Imports of goods and non-factor services 911 824 861
VI. Gross domestic product (mp) (III+IV-V) 5,796 5,982 6,256
Growth 3.7 3.2 4.6
VII. Gross domestic product (FC) 5,512 5,688 5,944
Growth 2.0 3.2 4.5
 Projections of Monetary Sector
Head
Asset Side of Banking System
1) Government Sector Borrowing (net)
a) Net Budgetary Borrowing
b) For Commodity Operations (Commercial Banks)
2) Credit to Non-Government Sector
a) Credit to Private Sector (incl. private sector investment Seasonality, current trend and news
b) Credit to Public sectors Enterprises Sector (PSEs)
3) Other Items (net)
4) Net Domestic Assets of the Banking System
5) Foreign Assets of the Banking System (net)
6) Monetary Assets (M2)
Factors and Methodology used in Projections
Based on fiscal sector projections which are
adjusted for monetary from cash to accrual
basis
Seasonality, recent trends and news
Seasonality, current trend and news
Residual of NDA
Balancing figure of M2 and NFA
BOP data
Monetary Outlook
 Projections of Monetary Sector
Head Factors and Methodology used in Projections
Asset Side of State Bank of Pakistan
1) Government Sector
a. Budgetary Borrowings Based on fi scal sector projections
2) Non-Govt. Sector
a) Claims on Scheduled Banks Targets of banks/limits and trends
i. Agriculture Sector Targets of banks/limits and trends
ii. Industrial Sector Targets of banks/limits and trends
iii. Export Sector Targets of banks/limits and trends
iv Housing Sector Targets of banks/limits and trends
v. Others Targets of banks/limits and trends
6) Other Items (Net) Residual of NDA
7) Net Domestic Assets Balancing fi gure of M2 and RM
8) Net Foreign Assets BOP data
9) Reserve Money Calculated from liability side
Liability Side
a) Currency in Circulation Seasonality and recent trends
b) Cash in tills Seasonality and recent trends
c) Deposits with SBP (banks and others) Seasonality and recent trends
e) Total Deposits Seasonality and recent trends
f) Monetary Assets (M2) Monetary Outlook
g) Reserve Money Calculated (a+b+c)
 Projections of Monetary Sector
Projections of Monetary Aggregates
Flow in billion Rupees
FY09 Jul 1 - Apr 17 FY10 Actual FY10 SBP Proj. FY11 SBP
Stocks Flows FY09 FY10 Q1 Q2 Q3 Q4 Year Proj.
Banking System
I. Net foreign assets (NFA) 517 -150 -231 64 141 -30 -51 104 164 -68
II. Net domestic assets (NDA) (a + b+ c) 4,620 598 307 217 -103 331 21 277 527 796
a. Net claims on government 2,034 524 264 212 35 86 50 96 268 292
of which Budgetary support 2 1,681 316 240 277 38 93 108 -84 155 242
Commodity operations 336 209 25 -64 -1 -7 -58 180 114 50
b. Credit to Non-government 3,190 172 201 213 -10 227 19 124 359 590
of which Private sector credit 2,907 19 55 134 -75 199 23 93 240 440
Public Sector Enterprises 266 153 145 78 64 29 -6 31 118 150
c. Others Items -604 -98 -157 -208 -128 18 -48 58 -100 -87
Broad Money (I +II) 5,137 448 76 281 39 301 -30 382 691 727
State Bank of Pakistan (SBP)
I. Net foreign assets (NFA) 324 -156 -239 82 150 -23 -52 106 181 -55
II. Net domestic assets (NDA) 1,183 183 206 73 -42 68 22 -13 35 260
a. Net claims on government 1,182 129 101 88 -86 22 92 -99 -71 5
of which Budgetary support 3 1,165 131 103 89 -85 22 92 -99 -70 5
b. Claims on Non-Government 296 77 72 19 -6 29 -3 47 66 75
c. Other items, net -295 -23 33 -35 50 17 -67 40 39 180
Reserve money 1,508 27 -32 154 108 45 -30 93 216 205
Memorandum items
Currency in circulation 1,152 170 150 154 109 36 -20 86 211 160
Banks' Deposits 3,980 278 -74 125 -71 265 -11 288 471 567
Money multiplier 3.41 3.41 3.29 3.26 3.20 3.30 3.34 3.38 3.38 3.40
 Projections of Pakistan’s Debt Profile
Projecti ons of Pakistan's Debt and Liabiliti es
In billion Rupees
FY10 Actual FY10 SBP's Proj. FY11 SBP's
FY09
Q1 Q2 Q3 Q4 Proj.
1. Pakistan's total debt and liabilities 2,3 (sum I to V) 8,744 9,292 9,699 9,788 10,592 12,513
YoY growth 13.4 21.4 9.7 - 21.1 18.1
Total debt 7,897 8,390 8,777 8,931 9,523 11,230
Total liabiliti es 847 902 922 856 1,069 1,283
I. G overnment sector debt and liabilities (A + B) 7,494 7,851 8,100 8,211 8,652 10,131
of which , total debt 7,280 7,650 7,927 8,070 8,360 9,807
total liabiliti es 214 201 173 141 292 324
A. Domestic debt and liabilities (a + b) 4,039 4,192 4,448 4,605 4,866 5,616
a. Domestic debt 3,853 4,010 4,293 4,483 4,593 5,311
i. Permanent 678 717 741 771 791 841
ii. Floati ng 1,904 1,970 2,184 2,300 2,336 2,656
iii. Unfunded 1,271 1,322 1,368 1,412 1,467 1,814
b. Domestic liabilities 186 182 155 123 273 305
of which , commodity operati ons 178 174 146 114 264 297
B. External debt and liabilities (c + d) 3,455 3,658 3,652 3,606 3,786 4,515
c. External debt 3,427 3,640 3,634 3,587 3,767 4,496
iv. Medium and long term 3,374 3,591 3,606 - - -
v. Short term (< 1 year) 53 49 27 - - -
d. External liabilities 28 18 19 19 19 19
II. PSE's Debt and Liabilities (C+D) 536 601 647 614 675 848
C. Domesti c Debt and Liabiliti es 449 515 565 533 594 761
D. External Debt and Liabiliti es 87 86 83 82 82 86
III. Private sector external debt 198 204 219 236 252 290
IV. Country's Debt from IMF 419 536 631 625 911 1,133
V. Monetary Authorities External Liabilities 98 100 101 101 102 112

FY10 Actual FY10 SBP's Proj. FY11 SBP's

FY09
Q1 Q2 Q3 Year Proj.
Pakistan's total debt servicing (1+2) 854 183 208 243 856 877
1. Interest payment on government debt and liabiliti es (E+F) 641 146 154 159 628 705
E. Domesti c debt and liabiliti es 571 134 135 139 555 605
F. External debt and liabiliti es 70 12 20 20 73 100
2. Principal repayment on government external debt 213 38 54 83 228 171
Summary of Macroeconomic Framework Projections
Projecti ons of Key Macroeconomic Indicators
FY09 FY10 FY11
Target / SBP Proj SBP Proj.
Budg. Est.
Output and Prices Annual growth rate in percent
Real GDP (fc) 2.0 3.3 3.2 4.5
Nominal GDP (mp) 27.3 12.9 15.3 15.8
CPI infl ati on (average) 20.8 9.0 11.7 10.8
CPI infl ati on (YoY in June) 13.1 - 12.7 9.8
Depreciati on of Rs/$ (average) -20.3 - -6.3 -5.8
Nominal Saving and Investment As percent of nominal GDP (mp)
Savings 14.3 - 16.4 14.8
Investment 19.7 - 19.1 19.0
External Sector Annual growth rate in percent; otherwise indicated
Current acc. defi cit (% of GDP) 5.6 - 2.7 4.2
Exports of goods (fob) -6.4 - 1.0 6.0
Imports of goods (fob) -10.3 - -3.0 7.0
SBP net reserves (in million US$) 9,529 - 15,108 15,917
Public Finance As percent of nominal GDP (mp)
Budget defi cit 5.2 4.9 5.4 5.6
Total revenue 14.1 14.6 14.0 13.7
Total expenditure 19.3 19.5 19.3 19.3
Monetary Sector YoY growth rate in percent
Broad money (M2) 9.6 - 13.5 12.5
NFA of banking system -22.5 - 31.8 -10.0
NDA of banking system 14.9 - 11.4 15.5
Reserve money 1.9 - 14.3 11.9
Debt and Liabilities As percent of nominal GDP (mp)
Pakistan's total debt and liabiliti es ; of which 66.8 - 70.2 71.6
Public sector debt and liabiliti es; of which 61.3 - 61.8 62.8