Consulate General of Switzerland
Karachi, 25th February 2011
1. ECONOMIC OVERVIEW:
Pakistan’s economy has been predominantly agrarian. Since Pakistan came into existence, the contribution of the agricultural sector to the GDP has declined gradually from over 50 percent in 1949-1950 to about 22 percent in the fiscal year 2009-10 (July 2009-June 2010). However, agriculture still remains the major sector of the GDP composition. Other economic sectors include industry and services, contributing to the GDP about 25 percent and 53 percent respectively. Since its independence in 1947, Pakistan has transformed itself from a low skilled agrarian economy to a semi-industrialized economy. On the other hand, Pakistan has a long way to go in economic and social development as a large portion of its 180 million inhabitants is still living below poverty line. During the last decade, economic developments in Pakistan have been - to a significant extent influenced by the Government’s Program for poverty reduction and the development of markets and the real economy. Following the liberalization of markets and the implementation of economic reforms, the following developments in the economic and social sector have been identified: High GDP growth resulting from output and sales growth;
Developments of money and securities markets;
Improvements in the standard of living and poverty reduction (based on economic growth); Development and reinforcement of the banking sector and enhancement of its role in the social and economic development of the country.
However, the economic development has been slowed down since 2008, as the macroeconomic situation deteriorated significantly owing to adverse security developments, large price increase of some commodities such as oil and food, global financial turmoil, and national political and security issues. Other challenges being faced by Pakistan’s economy include energy deficiency and growing population etc.
Furthermore, recent unprecedented floods and torrential rains (July-August 2010) in the country to some extent have intensified the effects of an already fragile macroeconomic environment. Currency: Pakistani Rupee (Rs.) is the official currency of the country. The notes are in denominations of 5000, 1000, 500, 100, 50, 20 and 10, while coins are available in denomination of 5, 2 and 1.
Rupee CHF parity/Exchange rate: 1 CHF = 92.47 Rs. as on February 25th 2011. Download from: www.osec.ch
2. OVERVIEW OF FINANCIAL SECTOR:
A sound and well functioning financial sector is essential to support economic growth of a country. Pakistan possess a wide range of financial institutions; commercial banks, specialized banks, national savings schemes, insurance companies, development finance institutions, investment banks, stock exchanges, corporate brokerage houses, leasing companies, discount houses, microfinance institutions and Islamic banks. They offer a whole range of products and services both on the assets and liabilities side.
Prior to 1971, the primary focus of the Governments was on developing commercial banks in the private sector and creating development institutions backed by Government. The private sector development, however, almost closed during the period 1971-1990, due to the nationalization policy of the Government. During this period, the banking sector came under the Government’s control. Since 1990s, the Government has followed more liberal and market-based reforms. The current structure of the financial sector in Pakistan is the result of several policy shifts and developments. Like many other developing countries, Pakistan also undertook the process of financial restructuring through reforms in early 1990s to establish a more market-based system of financial intermediation and Government financing, conduct the monetary policy more efficiently through greater reliance on indirect instruments and increase the...