The major economic challenges facing Pakistan are increasing poverty and unemployment, heavy external and domestic appreciation, high fiscal deficit and low investment. A group of observers place the responsibility directly at the doors of the IMF and World Bank and this Government’s sense of obedience, compliance and dependence against this powerful instrument of Western domination. First the decade of 1990s was a missing decade as far as Pakistan’s economic development. political variations and absence of endurance in policies, poor governance and the last May 1998 developments had together shaped very tough economic conditions in the country by October, 1999. Pakistan’s credibility was quite low both externally and particularly among the International Financial Institutions and also domestically with the general public. Until June 2000, the country was talented to achieve its finances without any recourse to International Financial Institutions. The most difficult challenge challenged by the country today in the short term is external liquidity problem i.e., the ability to meet its current responsibilities such as imports of goods and services and see all debt service obligations at the same time. There is a hole between external receipts and external payments of about $ 2.5-3 billion annually for the next few years. To meet this gap Pakistan has to suspend its debt service obligations and find ways to gain new concessional loans after limiting its expenditures and maximizing its revenues. The managers had the extra of using foreign currency payments of residents and non-residents to finance the external deficit. They hired short-term commercial loans to build up reserves. There has been very little investment in the country for the past numerous years with the result that unemployment has been increasing. Fixed income groups – paid class, pensioners etc., have not been decided any relief in the form of salary regulations. Depreciation of the Rupee in the last several years has completed imported goods and inputs fairly expensive. Public sector investment has weakened from 6% of GDP to 3% and lack of satisfactory tax revenues complete it impossible to increase public spending and offset the relaxed created by low private investment. There has been a decline in the unit price of Pakistani exports.