Advisor to the prime minister on Finance Shaukat Tarin has said here on Tuesday that the federal budget for 2009-10 will be presented either on June 6 or June 13.
‘Preparations for the budget have almost been completed but the final budget announcement date would be decided soon,’ he said talking to media at the launch of World Bank’s report on ‘Bringing finance to Pakistan’s poor’
The federal budget 2009-10 would be the first budget for Mr Tarin in capacity as the finance manager of the country.
Shaukat Tarin said that illegal channels still contribute to the major inflow of remittances into the country.
He acknowledged that the contents of the WB report that informal supply occurs through the organized hundi / hawala sector and through committees, shopkeepers, moneylenders and transfers through friends and family.
The WB report has called for easier access to finance for poor in Pakistan and added that un-official estimates of remittances to Pakistan are around $16 billion.
Mr Tarin said that though the remittances play a valuable role in supporting the economy by providing foreign exchange and improving financial strength to the individuals.
Responding to the WB report Mr Tarin said that the government has set the target to increase the outreach of the microfinance services to three million borrowers by 2010.
The report said that 14 per cent of Pakistanis were using a financial product or service of a formal financial institution including savings, credit, insurance, payments and remittance services.
While, it said that 40 per cent of adults in the country have no access to formal or informal financial systems, but the report said that if the informal financial access is taken into account around 50.5 per cent of Pakistanis have access to finance.
Shaukat Tarin said that there are 40 Microfinance providers which include seven Microfinance Bank with an overall operating base of 1,550 branches and services centers to serve a clientele of approximately two million.
‘The potential cliental base of microfinance sector is estimated to be around 25-30 million borrowers of whom a significant portion still remains unserved by both regulated and un-regulated sector,’ he added.
The advisor to the PM said that there are potentials for other products such as insurance, payments savings that could be launched through postal services network and mobile phones.
He said that increasing access to finance for the small and medium enterprises (SMEs) could also be facilitated by attracting institutional investors with a track record in SME lending and assisting other banks to go down market.
The Country Director for the World Bank in Pakistan, Yusupha Crookes presented the address of the welcome and highlight the main features of the report ‘Bringing Finance to Pakistan’s Poor.’
The report said that Pakistan microfinance market has much potential for a rapid outreach expansion and faces considerable unsatisfied demand, especially for saving products.
Tatiana Nenova, Senior Economists WB and lead author of the report, said that if appropriately supported, SMEs have the potential to be the growth engine of economy due to their ability to create jobs, foster entrepreneurship and to provide depth to the industrial base.
The SMEs sector get a small share of credit despite having a greater role to play in the economic development.
‘SME lending accounts to only 16 per cent of the total lending volumes.’ Ms Nenova said adding that an aggressive promotion of an enabling environment leading to higher financing for the SME sector was needed to reverse this trend.
The World Bank Country Director Yusupha B Crookes was of the view that despite significant banking sector reforms and efforts to expand financial market coverage over the past few years, outreach has lagged behind the country’s growth and development needs.
He said that this report demonstrates that there is an enormous growth potential for financial services in Pakistan, especially in the rural areas.
According to the report Policy efforts to increase access to finance in Pakistan have taken time to bear fruits, but now access is indeed expanding quickly in certain financial sectors especially the microfinance remittances, but at a very low base.
The WB report also speaks about the rapid growth of Islamic banking in the country but said that it lacked liquidity management instruments.
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