PAKISTAN-Pre-empting an Elected Government

and geographical influence. They nevertheless need to be taken note of for they have the potential of delaying the implementation of the present proposals EXCHANGE RESERVES The Flip Side THE rise in the country's foreign currency assets (including SDRs) to $ 7,247 million as on September 3 is impressive and the Reserve Bank and the government have been patting themselves on their backs over the success of the new policies of aggressive export-orientation and import liberalisation. Apart from the increase in foreign currency assets of about $ 795 million since March 31, on top of sizeable accruals in the two previous financial years, there has been some improvement in the composition of the assets in that the more volatile components, such as swaps and funds under the foreign currency (banks and others) deposits scheme, have declined substantially since the end of March. The bolstering of reserves has come about as a result the RBI buying as much as $ 3.6 billion worth of gross reserves from the market, while selling only $ 1.3 billion, thus achieving a net purchase of $ 2.3 billion. With net purchases of this order by the RBI, the exchange rate of the rupee has been kept impressively stable since the exchange rate unification in March. The government's satisfaction in this respect is supported by the performance of exports and reduction in the merchandise deficit. During April-July 1993, exports rose by 27.2 per cent to $ 6,916 million from $ 5,438 million in the corresponding months of the previous year. Imports in this April-July registered an absolute decline of 2.7 per cent from $ 7,559 million to $ 7,354 million, thus narrowing the trade deficit sharply to S 438 million from $ 2,122 million in the same period of last year.