Impact of September 11, 2001 Terrorist Attack on Pakistan Economy

Abstract

Pakistan's economy has been on the downfall for the past several years, has been hit by poor crops, political chaos, social instability, corruption and sanctions in the past three decades. Pakistan’s economy has seen significant progress in fiscal year 2000-01 and afterwards. The year have seen Pakistan successfully restoring relations with the international community, acquiring high credibility for its reforms program, harnessing important resources at home and abroad, and putting into motion a broad participative process towards the revival of the economy. Given the difficult past that Pakistan’s macroeconomic environment had reached by the end of the last decade, the Government confined its stabilization and structural reform programs during the period. These include comprehensive tax reforms, trade and tariff measures, and price deregulation across important sectors, such as energy and agriculture, privatization of major public sector corporations, financial and capital market reforms, measures towards improving governance, fiscal transparency, and dedicated poverty alleviation programs. Stabilization and structural reforms undertaken during the period have paid rich dividends. Sharp reduction in fiscal and current account deficits, an impressive recovery in industrial production, reasonable increase in tax collection, lower than targeted inflation, sharp increase in credit to private sector, a modest growth in exports and remittances, and impressive build up of foreign exchange reserves have been the major success of last year.