Pakistan Out of the Grey List

After 4 long years, Pakistan completed all 34 points of the FATF action plan.

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Macro Bite # 146

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The FATF’s action plan for Pakistan focused on reducing Pakistan’s role in terror financing and money laundering. For the past two years, Islamabad has been under increased monitoring by FATF to ensure check-ins for money laundering and overseas financing. The monitoring has caused economic losses in addition to Pakistan’s cost of war.

One of the most crucial outcomes of this decision is Pakistan’s credit rating in the international market. Throughout the past 4 years, Pakistan’s borrowing has faced challenges due to the grey list. After the judgment, Pakistan will be able to receive funds from many international organizations such as the International Monetary Fund (IMF), Asian Development Bank (ADB), and the World Bank.

Economic implications of this funds transfer include addressing the 'rupee-dollar parity', and liquidity in the stock market. Therefore, the decision helps ease Pakistan’s woes in the context of its current account deficit, and its vicious debt problem.

GRAPHICS OF THE DAY

From 2001 to 2011 the direct and indirect cost of the war on terror incurred by Pakistan amounted to USD 67.9 billion

Cost of War on Terror for Pakistan's economy (2001 to 2011)

Source: Minstry of Finance *Estimated on the basis of 8 months actual data

Change in percentage (Year-on-Year) of Cost of War on Terror for Pakistan's economy

Source: Ministry of Finance * Estimated on the basis of 8 months actual data

TWEET

Pakistan Institute of Development Economics (PIDE) @PIDEpk

According to research by PIDE, foreign investors simply do not take much interest in the country. Trapped in a low-saving, low-investment cycle, the country ekes out an existence with a begging bowl in hand while politicians grandstand on podiums.

dawn.comA lame horse economyPakistan is a volatile country. The foreign direct investment flowing into the country is no less immune to the recurrent cycles

What Else We’re Reading

• Removal from FATF ‘grey’ list to augur well (Business Recorder)

• Ishaq Dar refuses tax waiver on IT exports (Dawn)

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