Government College Women University Sialkot

(GCWUS)

BS Commerce ( 4th semester)

ASSIGNMENT

Course Title: Economic Issues of Pakistan

Submitted To: Maam Sania

Submitted By: Nabeela Muhammad Boota

Roll no. BS-Com-R-005

 Money & credit
Multi-Decade High Inflation
Multi-decade inflation means inflation persists for many decade causing substantial
increase in overall prices over time. Inflation reduces the purchasing power of money.
 TREND: Inflation Rate in Pakistan averaged 8.26 percent from 1957 until 2023.

SBP
State Bank of Pakistan is the central bank of Pakistan and is responsible for regulating and
supervising country’s banking system, controlling money supply and formulating monetary
policy to maintain price stability and promote economic growth.
 TREND: Monetary Policy Committee (MPC) maintain the policy rate at 22
percent. The latest inflation outturn reflecting the continuing declining trend in
inflation from its peak of 38 percent in May to 27.4 percent in August 2023.

Broad Money(M2)
Broad money refers to measure the total money supply in an economy. It is measured as
a sum of currency in circulation; total deposits of non-government sector, including
residents’ foreign currency deposits; and other deposits with SBP. From asset side, M2
is a sum of net domestic assets and net foreign assets of the banking system (i.e. SBP
and scheduled banks).
 TREND: September 1 shows that broad money (M2) growth has decelerated to 13.6
% on y/y basis from 14.2 percent observed at end-June 2023.

Net Domestic Assets (NDA)

Net domestic assets refers to the difference between the central bank’s domestic assets and
its domestic liabilities.
 TREND: The banking sector increased by Rs.4098.6 billion during 1st July- 12th May
2023 as compared to Rs.2889.1 billion during same period last year. 27.1%

Currency in Circulation
Currency in circulation refers to currency held by public i.e. currency outside the banking
system.
 TREND: CiC increased of Rs.1334.9 billion during 1st July – 12th May2023
expansion of Rs.1006.7 billion same period last year. 9.15%

Bank Deposits
Bank deposits are funds that individuals. Organizations hold in a bank account.
 TREND: Bank deposits increased by Rs.683.0 billion during 1st July- 12th May 2023
as compared to increase of Rs.482.4 billions same period last year. 17.87%

Government Borrowing
Government borrowing refers to the practice of a government obtaining funds by issuing
debt securities or other forms of government debt.
 TREND: Government borrowing for budgetary support stood at Rs. 3043.3 billion
during 1st July- 12th May 2023 as compared to 1570.0 billion during same period of
the year.

Net Foreign Assets

Net foreign assets refers to difference between country’s foreign assets and its foreign
liabilities.
 TREND: NFA decreased by Rs.2072.3 billion during 1st July-12th May 2023 as
compared to decline of Rs. 1377.1 billion during same period last year.

Working capital and Fixed investment

Working capital refers to funds that a company uses for day to day operations and
managing short term liabilities.
Fixed investment are loans provided to finance long term investment in fixed assets.
 TREND: contraction as been observed in both working capital and fixed
investment loans during July- April 2023. Working capital loans observed net
retirement of Rs 460.3 million during Jul-Apr, FY2023 against net borrowing of Rs
628.9 billion during same period last year. Fixed investment loans reached to Rs
185.4 billion against Rs 366.7 billion in comparable period last year. 147.5%
Loans for Commodity Finance
Loans for commodity finance are designed to finance the production, purchase, storage or
transportation of commodities.
 TREND: Loans for commodity finance observed a net borrowing of Rs 339.5 billion
during the period 1st Jul-12th May, FY2023 as compared to net borrowing of Rs
278.9 billion during comparable period last year. 40.360%

Private Sector Credit

Private sector credit refers to borrowing activities of individual and businesses from
private financial institutions and other non government lenders.
 TREND: During 1st July-12th May FY2023, private sector credit stood at Rs 75.4
billion as compared to Rs 1,345.2 billion during same period of last year. 25%

Weighted Average Leading Rate

WALR refers to average interest rate at which banks and financial institutions lend money
to borrowers.
 TREND: (WALR) on gross disbursements has increased from 10.6% in March, 2022
to 18.0% in March 2023. Similarly, Weighted Average Deposit Rate (WADR) also
increased from 5.1% in March 2022 to 8.1% in March 2023. 18.0%

Reserve Money (RM)

Reserve money refers to total amount of currency in circulation and reserves held by
commercial banks at central bank.
 TREND: Reserve Money (RM) grew by 20.2% (Rs 1880.2 billion) during 1st
July12th May, FY2023 as compared to growth of 13.4% (Rs 1165.4 billion) during
same period last year.

Banking Sector
Banking sector refers to system of financial institution that provide various financial
services.
 TREND: The banking sector performed reasonably well during CY22 as asset base
of the banking sector expanded by 19.1% (19.6% growth in CY21). 83%
Solvency indicators
Solvency indicators is the measure used to asses the financial health and stability of an
individual, business or financial institution.
 TREND: Solvency indicators such as Capital Adequacy Ratio (CAR) of banking
sector improved to 17.0% by end Dec- 2022.

Assets Quality Indicators

Assets quality indicators are measures used to assets the quality and health of financial
institution’s assets, loans and investments.
 TREND: Asset Quality indicators of the lending portfolio improved as gross NPLs
to gross loans fell to 7.3% by end Dec-22 from 7.9% at end Dec-21.

Assets of Islamic Bank Industry

The assets of Islamic bank industry refers to financial resources and holdings of Islamic
banks and financial institutions that operate in accordance with Islamic principles and
shariah law.
 TREND: Assets of Islamic Banking Industry (IBI) posted YoY growth of 29.5% in
CY22, slightly lower than growth of 30.6% in CY21.

Deposits of Islamic Banking Institution (IBI)

IBI refers to funds that individual, businesses and other entities place with Islamic banks.
 TREND: Deposits of IBI witnessed growth of 22.6% in CY22 as compared to the
growth of 24.3% in CY21.

Numbers of Borrowers
The number of borrowers refers to the count of individuals, businesses, entities that have
taken loans or financing from a financial institution.
 TREND: Number of borrowers of microfinance industry increased by 12% to
register 9.1 million as of end December 2022 from 8.0 million as of December 2021.

Number of Branchless Banking

Number of branchless banking refers to the count of banking services that are provided
without need for physical bank branches.
  TREND: Number of Branchless Banking (BB) Accounts reached 97 million in CY22
after witnessing growth of 23% as compared 78.8 million in CY21.

BB Deposit
TREND: BB deposits increased by 35% to Rs 88.4 billion in CY22 from Rs 65.5 billion in
CY21.

Microfinance Industry
Microfinance Industry provides small loans and financial services to low-income
individuals and entrepreneurs.
 TREND: Microfinance industry witnessed 25% growth in its aggregate microcredit
portfolio, which increased by Rs 98.6 billion to Rs 491.2 billion as at end December
2022 from Rs 392.6 billion at the end of December 2021.