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A Seminar Report on final

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A Seminar Report on final
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  A Seminar Report on DEBT MANAGEMENT IN PAKISTAN Submitted in partial fulfillment of award of MASTERS IN COMMERECEB!unera "#a#$adi%"t Bat&#REG' ()%*+AG+*,%  ACKNO-.EDGEMENT  F  irst    of all I thanks to  ALLAH ALMIGHTY who is the most Beneficent and the most Merciful Who’s Blessings are aundant and fa!ors are unlimited"  I take this o##ortunit$ to e%#ress m$ heartil$ thanks to all those who indi!iduall$ as well as collecti!el$ hel#ed me in the successful com#letion of this seminar" I would like to e%#ress m$ immense gratitude and sincere thanks to &rof"  Asim Ali 'ogar  ( whose coo#erati!e guidance has hel#ed me in successful com#letion of the seminar on ) st   *ul$( +,)-" I’m !er$ much thankful to  'r" Munir Ahmad .H/'( 'e#tt" /f IBM01 to hel#ing me to com#lete the seminar successfull$" Name' S/NDASDept"0 IBMSRe1' ()%*+a1+*,%  ABSTRACT  A poor nation, in order to meet the economic needs of its growing population and also to improve their standard of living, must grow economically. Economic growth requires investment which has to be financed from savings. If a nation cannot finance its total investment needs from its own (i.e. national) savings, it has to borrow from abroad. To the etent !ational "avings fall short of !ational Investment they are being supplemented by #oreign "avings i.e.  X-M . $overnment can borrow both at home as well as from abroad. If it borrows from abroad, accumulated borrowings constitute Eternal %ebt. If it borrows at home, it raises what is called %omestic %ebt. &orrowing is not bad per se, provided the borrowed funds are used so prudently and so productively as to generate enough surpluses to ta'e care of the requirements of the repayment of the rincipalas also of the payment of Interest as and when these fall due. %ebt "ervicing implies i)  Interest ayments in relation to %omestic %ebt. ii)  Interest ayments in relation to Eternal %ebt. iii)  *epayment of rincipal in relation to Eternal %ebt. %ebt "ervicing is the first charge on the $overnment+s total revenues. The other dimension of the Eternal %ebt is that it has to be repaid and servicedin foreign echange. #or eample, in the case of a'istan, it is not enough for the $overnment to have the rupeeequivalent of its Eternal %ebt "ervicing needs. It must have the needed internationally convertible currency (mostly -" ) as well. Thus, in sum, problems relative to public debt flow fromi )  "avingsInvestment gap. ii)  $overnment *evenues Ependitures gap. iii)  &alance of payments gap. Debt Indicators  To ma'e an assessment of the debt stoc' and the ability of the government of a country to repay, certain ratios are used to correlate the debt stoc' and the debt servicing liability with $%, $overnment revenues, echange earnings, and echange reserves serving as indicators of capacity to pay bac' and service the public debt.  INTRODUCTION Eternal resources are an important supplement to domestic resources in the process of development. In a'istan, however, the relatively easy availability of eternal resources has often led to substitution of foreign savings for domestic effort. "ince large current account balance of payments deficits could often be financed without too much difficulty, eports and domestic savings did not receive the urgent attention from the government they deserved. "igning of a /utual %efense Agreement with -"A in 0123 opened the way for largescale eternal military and economicinflows. %uring 012224 economic inflows were easily forthcoming and, therefore, at the end of 0125s, foreign official inflows totaled -" $ 500   miion! or "# %er cent  of $%, for the whole of a'istan.a'istan is under obligation to pay bac' to a wide variety of ban's and other agencies. According to Economic "urvey of a'istan 01116555, the share of financial institutions (I%A, I&*%, A%&, I#A%, etc.) in total eternal debt of a'istan as of &0t' (ne "000 *as 5+#, %er cent , while the share of consortium countries (7apan, -"A, $ermany, #rance, 8anada, Italy, -9, "weden etc.) was 0#& %er cent . The share of nonconsortium countries (9orea, 8hina, *ussia, Australia, etc.) was 5#5 %er cent , while the share of Islamic countries (9uwait, "audi Arabia, Islamic &an', Tur'ey, etc.) was "#"%er cent . The share of longterm debt in total debt decreased from ,#5 %er cent  at end of 7une +,,+ to .,#/ %er cent at end o (ne +,,,#  What is Debt?  An amount of money borrowed by one party from another. Many corporations /individuals use debt as a method for making large purchases that they couldn’t aord under normal circumstances. An arrangement gives the borrowing party permission to borrow money under the condition that it is to be paidback at a later date, usually with interest. DEBT MANAGEMENT   A debt management plan is a formal agreement between debtor creditors. %ebt management plans help reduce outstanding, unsecured debts at a reduced level over a fied period of time to help regain control of financing.%ebt : not a bad thing as a long as it is used efficiently to generate enough resources to boost long term economic growth.   PROFILE OF DEBT  Public Domestic External Debt DebtDebt
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