ABSTRACT
175Over the past 50 years, Pakistan’s record on macroeconomic management has been mixed. In the face of a variety of internal and external shocks, the country has managed to avoid excessive macroeconomic instability in the form of hyperinflation or severe exchange rate volatility. While its internal and external public debt has grown as a share of gross domestic product (GDP), and is now approaching levels that warrant attention, Pakistan has so far managed this growth without resorting to sovereign defaults, which leave a long shadow on a country’s ability to access capital markets. Finally, Pakistan has also avoided the kind of large-scale banking crises that many other developing countries have experienced with lasting impact on credit availability and private sector development.
