Leading Issues in the Economy of Pakistan: Agenda for Reforms Figure 10.1: The Level of Import Cover and the percentage change in the Real Exchange Rate Source: SBP The specification of the balance of payments module and the inflation module in the Macroeconomic Model is given in Chart 10.1. The exogenous variables which drive the equations are as follows: • Unit Value Index, in US$, of exports • Unit Value Index, in US$, of imports • Net Inflows of Primary and Secondary Income into the current account of the balance of payments • Net Inflows into the Financial Account of the balance of payments of FDI, FPI, Government borrowing, etc. • Foreign exchange reserves at the start of the year • Inflationary expectations as measured by the rate of inflation in the previous year. 102