Dar launches national financial inclusion strategy 2015-20

Finance Minister Ishaq Dar has said after defeating the threat of default and converting instability into a stable economy, the government will now focus on economic growth.

Addressing a launching ceremony of the National Financial Inclusion Strategy Pakistan 2015-2020 in Islamabad on Friday afternoon, he said despite challenges the GDP growth rate would be 4.2 per cent in the current financial year. The objective of the strategy is to build momentum and push forward reforms to achieve universal financial inclusion in an integrated and sustained manner.

He said the target of 5.5 per cent could not be achieved because of floods that damaged agriculture sector and undesirable political sit-in in Islamabad. The finance minister acknowledged that the fall in prices of oil and other commodities in the international market helped contain current account deficit, which was over 2 per cent in previous years, to below one percent this year. However, this also resulted in fall in revenue collection.

The minister said that the budget for the next year would be announced on 5th of next month. He categorically declared that there would be no tax in the coming budget on the foreign remittances.

Dar said: “The government is striving to create more opportunities of doing business and make the common people of Pakistan self reliant and economically empowered.”

In this regard, the government is working at various levels to improve governance and availability of energy and other key infrastructure inputs, he further said.

He highlighted that recent historic agreement for creation of Pak-China Economic Corridor was an economically vital plan devised to help drive Pakistan’s economic growth. The economic corridor will connect economic agents and link economic centers with large resources which can be cultivated for job creation.

While emphasizing the need for increasing access to fair and dignified financial services to achieve sustainable economic growth, the minister said that the NFIS, championed by the State Bank of Pakistan, was consistent with the government of Pakistan’s Vision 2025, which calls for enhancing access to credit for SMEs and focuses on strengthening and deepening of financial inclusion in the country.

He further pointed out that the government was already working on some of the drivers that the NFIS identified to catalyze financial inclusion. In particular, digitization of payments is a priority area and resolute efforts have been taken to support the digitalization of payments and give depth to financial services among various segments of the population. He shared that Pakistan had become a member of the better than cash alliance -a global initiative. The contribution of branchless banking is significant when it comes to channelizing the government-to-person payments.

Speaking at the occasion, SBP Governor Ashraf Mahmood Wathra said that since the early 1990’s, Pakistan’s financial sector had witnessed considerable reforms that have significantly strengthened its soundness, profitability, efficiency and diversity. “Also, Pakistan has been a pioneer in championing financial inclusion for over a decade and achieved a large number of significant milestones. In particular, the creation of a regulatory framework for Microfinance Banks in 2001, the expansion and modernization of online credit information bureau (e-CIB) in 2005, the adoption of branchless banking regulations allowing a tiered approach to know-your-customer (KYC) requirements in 2008, the launch of financial inclusion program under DFID support which includes risk sharing initiatives, smart grant facilities for capacity development, innovation and market infrastructure development in 2008, the establishment of a specialized microfinance credit information bureau (m-CIB) in 2009 and the launch of a nationwide Financial Literacy Program in 2012.

He pointed out that despite the sustained efforts, the level of financial inclusion remains very low and there were a number of reasons for the low level of financial inclusion. He shared that the persistence of financial exclusion in the face of long-standing efforts to promote inclusion pointed the need for a comprehensive national financial inclusion strategy. The strategy has thus created the needed platform for SBP, GoP and private sector to adopt and implement a comprehensive set of coherent and sequential reforms needed to influence financial inclusion in a big way.

On this occasion, Mr Saeed Ahmad, Deputy Governor, State Bank of Pakistan, while making a detailed presentation said that about 50 per cent of the entire population was completely financially excluded with no access to financial services such as formal savings, payments, deposits, and credit, therefore, financial inclusion was a priority area for government and SBP. He also shared various initiatives taken by the government and SBP to promote financial inclusion in Pakistan.