News: Pakistan stability steady on Financial Development Index of WEF
Publication: Pakistan Observer
Date; November 1, 2012
Web Address:- http://pakobserver.net/detailnews.asp?id=180316
Pakistan stability steady on Financial Development Index of WEF
Islamabad—Pakistan continues to show stability on the Financial Development Index of the World Economic Forum (WEF) on the indicators; cost of closing a business, where the rank of 5 was maintained, also showing stability in frequency of banking crises and output loss during banking crises, Financial Development Report 2012, of the Forum unveiled on Wednesday. According to WEF report 2012, Pakistan again secured the top rank of 1 among 62 economies; similarly on the public ownership of banks, which is a percentage of assets held by the 10 largest banks that is located in banks that are more than 25 percent government owned, Pakistan again secured the top rank of 1.
The report, however observed that Pakistan faces tough challenges on developing its financial markets. It added that Pakistan ranks at 58 out of 62 economies in the Financial Development Index of 2012, losing 3 points from its position of 55 in 2011.
The Financial Development Report 2012 depicts commercial and retail access to finance shrinking in Pakistan. Financial systems across the world are stagnating, leading to challenges for a global economic recovery, according to the fifth edition of the World Economic Forum’s Financial Development Report 2012 released on Wednesday.
“The Financial Development Report shows that financial systems in advanced and emerging economies are stalling”, said Giancarlo Bruno, Senior Director at the World Economic Forum. “Macroeconomic uncertainty, as well as concerns related to regulation, contributes to inhibiting the financial industry from funding much-needed growth.” Amir Jahangir, Chief Executive Officer – Mishal Pakistan, a country partner institute of the Center for Global Competitiveness and Performance, World Economic Forum said that “the Financial Development Report 2012 ranks 62 of the world’s leading financial systems and capital markets, analysing the drivers of financial system development in advanced and emerging economies to serve as a tool for countries to benchmark themselves and establish priorities for reform”.
The rankings are based on more than 120 variables spanning institutional and business environments, financial stability, and size and depth of capital markets, among other factors, he added. The Report also shows an improvement in the total number of active borrowers from micro-finance institutions per 1,000 adults, where Pakistan has improved its position of 12 in 2011 to 9th in 2012.
Pakistan has shown slight improvements on the strength of auditing and reporting standards, where it is ranked 48 in 2012 as compared to 52 in 2011. On the pillar of legal and regulatory issues Pakistan has shown significant gains, by improving the burden of government regulations, securing 21 rank as compared to 32 last year. The regulation of securities exchanges has also improved 5 points with a rank of 37 out of 62 economies globally.
The current account balance to GDP, a variable, which is the three-year average of current account balance to GDP, indicates the difficulty Pakistan had in mobilizing the foreign exchange necessary for debt service (from 2009 to 2011) has also improved from 53 last year to 40 in the current year.