Adviser seeks strategies to further microfinance growth

ISLAMABAD: Adviser to Prime Minister on Finance Hafeez Shaikh on Wednesday underscored a need to formulate strategies to spur growth in microfinance sector.

Shaikh asked participants of a microfinance conference to deliberate on how the cost of doing business could be reduced in terms of reduced rate of interest and the time lost in processes, how one could increase access or scale up and what exactly the impact means in terms of jobs and tackling poverty.

“We also need to debate how we can keep learning as these are important questions that need to be debated and answered to formulate strategies for furthering growth in this sector,” he said.

He was addressing the inaugural session of the two-day conference, titled ‘Rethinking Microfinance: Developing a New Inclusive Finance Compass’.

Shaikh said the government is working on a strategy to lead a transition away from a largely import-oriented economy to the one where the focus is on exports and earning of dollars.

The adviser said exports showed negative growth for five consecutive years, “but because of incentives given to exporters in terms of no taxes on export sector as well as subsidisation of gas and electricity and grant of additional Rs300 billion subsidised loans, the exports had gone up 3.4 percent during the first four months of current fiscal year with 9.6 percent growth recorded in the month of November alone”. “Fifteen months of effort and hard work by the government had paid off and one could see the beginning of an economic turnaround and the economic environment becoming more stable as being recognised by the international community and global economic institutions,” he said.

The adviser said more than $1 billion investment in Pakistan’s bond market and a 238 percent growth in the foreign direct investment in the first four months of this fiscal year to $650 million were reflection of an increased level of confidence the international community had begun to show in the Pakistani market.

“Similarly, IMF (International Monetary Fund) applauding Pakistan for meeting all agreed structural benchmarks with comfortable margins in the first quarter, Bloomberg declaring Pakistan Stock Exchange as the world’s best performing market in last three months and now Moody’s upgrading Pakistan’s ranking from the negative to stable are positive developments and signs of the progress achieved on the economic front by the government.”

Shaikh said current account deficit turned into a surplus for the first time in many years in the November. Similarly, the fiscal deficit adjusted for interest payment also turned into a surplus in the first quarter of this year, he added.