Economists have predicted that the Pakistan’s economic growth in the present fiscal year is expected to hit a 9-year low, dipping to approximately 2.9 percent, adding that looming balance of payment shortage, cut in development expenditures, monetary tightening and depreciation in the local currency will slow down local consumption and investment as well. With this in mind, the Government of Pakistan has unveiled a National Financial Inclusion Strategy (NFIS) an upcoming 5-year plan. Sources mention that as of 2015, only 16 percent of Pakistan’s adult population had a bank account. Whereas the number of accounts for women was even lower at 11 percent. This policy adopted through the last government led to substantial progress, but more needs to be done. This is why the sitting government has planned to prioritize NFIS as part of its 100-day agenda for the 5-year period till 2023. Sources also mention that the Government of Pakistan would meet its goal at all costs and are trying their best.
The real progress Pakistan has attained seems to be the Memorandum of Understanding (MoU) with 26 states to recover looted wealth. The present Government of Pakistan has inked contracts with 26 states and also inked a MoU with Switzerland recently. The government officials have been able to trace $11 billion undeclared money of Pakistani in global states. The present government has been able to retrieve land value Rs 350 billion in ongoing anti-encroachment drives against the land mafia. It is also said that a person’s ability to access finance is critical to ensure that opportunity is evenly spread in society. It is also connected to assisting the poor. However, Pakistan’s level of financial inclusion is one of the lowest globally. This plan will be strictly monitored through the government.
Digital payments
Pakistan has posted phenomenal growth in the past 10-12 years in the IT industry during which its contribution stood 3.5 of total exports in 2018 from 1.3 percent in 2006, while it presently employs over 65,000 skilled labor force of Pakistan. The policy would assist people make more digital payments. This includes 100 percent digitization of government receipts and payments. The Government of Pakistan has set a target of 65 million active digital transaction accounts with 20 million accounts through women.
Growing bank deposits
Economists have stated that Pakistan’s banking sector comprises of commercial banks, foreign banks, Islamic banks, development finance institutions (DFI’s), and micro-finance banks. Currently there are 26 commercial banks, 6 DFI’s, and 11 micro-finance banks operating in Pakistan. The Government of Pakistan has also set a target to raise the deposit-to-GDP ratio to 55 percent. It is also planned that the banks would develop innovative and specialized products to encourage people, particularly in rural and semi-urban regions, to put their savings in the banking system. This would encourage higher savings.
SME finance
Small to Medium Enterprises (SMEs) are the backbone of the country’s economy as 60 percent population is based in rural regions and is sharing in the development of Pakistan. Experts mentioned that the government’s plan includes giving loans to 700,000 SMEs to make sure the sector forms 17 percent of total credit to the private sector. To attain this target there would be a national SME policy, which would strengthen state institutions that support SMEs. The plan mainly focuses on IT and tourism as well. The government also plans to incentivize banks through offering them tax rebates. The government hopes that this 5-year plan can create 3 million career opportunities, and lead to a $5.5 billion raise in our exports by improved access to finance to SMEs. It will allow reduced income tax (about 20%) on income earned through commercial and microfinance banks on SMEs, housing and underserved areas for priority sectors.
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Rising agricultural financing
Domestic experts also have recorded that Agriculture contributes 19.5 percent to Pakistan’s GDP, employs 42 percent of the labor force and (along with ancillary industries), offers livelihood to 62 percent of the population, and constitutes 65 percent of Pakistan’s export earnings. The Government of Pakistan plans to improve agriculture loans to Rs1,800 billion in its 5-year term and serve 6 million farmers by digital solutions. It is also expected that the present government will provide subsidies on agricultural inputs to 3 million small farmers by this digital channel.
Improve Islamic banking system
According to the State Bank of Pakistan, profits of the Islamic banking industry surged by 27.7 percent to Rs23 billion in 3QFY18, from Rs18 billion in the corresponding quarter previous year. The liquid assets to total assets and liquid assets to total deposits ratios of the industry reached at 22.8 percent and 27.9 percent, respectively. Furthermore, the government also plans to improve the share of Islamic banking to 25 percent to cater to the people who stays away from interest in Pakistan. The government envisages that the outreach of Islamic banks would be approximately 30 percent of total bank branches.
Low-cost housing
The government plans to standardize and simplify the application form and scale up housing microfinance and revive housing finance firms. The Government of Pakistan has planned after holding an industry-wide consultation and analysis.
Conclusion
No doubt, India and Bangladesh have gone to IMF only once. But it is calculated that Pakistan has gone to it 16 times. The Government of Pakistan needs to do four things for itself for not seeking IMF’s help – improving exports, investment, remittances and tax reforms. The corruption has major hindered our country’s progress. Truly speaking our country cannot progress until people are stopped from engaging in corrupt practices.