ISLAMABAD: The State Bank of Pakistan (SBP) reveals an encouraging growth in the banking sector in spite of considerable economic challenges during the Fiscal Year 2022-23.
The recently released Governor’s Annual Report (GAR) demonstrates a notable 17% increase in the total assets of the banking sector, signaling resilience in the face of various economic headwinds.
The report acknowledges the severity of challenges, citing external and domestic shocks, structural weaknesses, and persistently high inflation amidst economic contraction. However, amid these difficulties, the report underscores the financial sector’s ability to maintain stability and contribute significantly to the country’s economic landscape.
One of the standout aspects highlighted in the report is the commendable performance of Islamic Banking Institutions (IBIs) during the review period. Outperforming their conventional counterparts, the IBIs exhibited a double-digit growth in deposit mobilization and excelled in financing and investments.
Economists and financial experts viewed this growth as a positive sign for Pakistan’s financial landscape.
Dr. Ahmed Faraz, a prominent economist remarked, “The robust growth in the banking sector’s total assets, particularly in IBIs, showcases resilience and adaptability. It’s a positive signal for the overall economic health of the country.”
The GAR FY23 also sheds light on the SBP’s proactive measures to address economic challenges. The central bank maintained a contractionary policy stance, raising the policy rate by a cumulative 825 basis points during FY23. These measures, coupled with fiscal policy resilience, played a crucial role in containing inflation and maintaining macroeconomic stability.
“In the face of economic uncertainties, the SBP’s strategic approach is evident in their contra
contractionary policy stance and fiscal coordination. This has been instrumental in navigating challenges and ensuring stability,” stated Dr. Ahmed.
Despite a contraction in real GDP and missed fiscal targets, the report emphasizes the financial sector’s pivotal role in meeting the economy’s credit and financial service needs. The 17% growth in total assets indicates a resilient financial system that continues to play a stabilizing role amid the economic turbulence.
As Pakistan looks towards the future, the GAR FY23 suggests that a collaborative and strategic approach between monetary and fiscal authorities will be crucial for sustained economic recovery.
The positive growth in the banking sector provides a ray of hope amid the broader economic challenges faced by the country. –INP
