US committed to provide economic assistance to Pakistan

KARACHI: The United States is determined to continue providing economic assistance to Pakistan in 2016 to help the country improve security and development in the border areas, its senior official said on Wednesday.

“We are committed to provide economic assistance…We are currently awaiting a decision from the congress to see what next year [2016] allocation will be,” said John Groarke, the United States Agency for International Development (USAID) Mission Director for Pakistan.

Groarke, talking on the sidelines of the inaugural session of a three-day conference on ‘Non-Banking Finance and Capital Markets’, said Pakistan is one of the two largest recipients of US government economic assistance in the world. 

“Over the last 10 years, the United States has invested around $7 billion in Pakistan. That reflects how important Pakistan is to us,” he said. "The United States has been a close partner of Pakistan in its development for not only the last 10 years, but for decades.”

The Securities and Exchange Commission of Pakistan, in partnership with USAID, organised the conference.

Groarke said there is a need to promote stability in Pakistan to commence development and foster economic growth.

The USAID is financially helping various sectors, including financial, agriculture, energy, health and education to Pakistan. It’s rendering efforts towards the development in the federally administered tribal areas.

USAID has invested around one billion dollars to improve security and bring stability in the tribal areas.  Much of the funds have been used to develop small infrastructure, including roads, bridges and dams. 

The funds were also utilised to help the internally displaced people return home and for their economic livelihood.

Groarke, addressing the inaugural session, said development of the non-banking financial sector is a must to facilitate the private sector, particularly micro, small and medium-sized enterprises, to have an access to capital for starting new businesses or expansion.

“The non-banking financial sector is terribly underutilised,” he said, citing a SECP’s report that said non-banking financial companies, excluding insurance business, accounts for only 4.9 percent of the total assets of the financial industry.

“Future of Pakistan is with the private sector, which generates jobs people need,” he added. 

USAID’s upcoming small and medium enterprises activities will increase the access of small and medium-sized enterprises to all forms of financing, such as equity, venture capital and credit finance.

Governor Ashraf Mahmood Wathra at the State Bank of Pakistan said the conference will support efforts to promote non-banking financial sector and capital markets as an alternative source of funding for businesses and diversify investment opportunities for the savers.

“Public-sector NBFCs (non-banking financial companies), such as State Life Insurance Corporation and National Investment Trust have played a significant role in catering to the investment need of the public," Wathra said. 

He said the share of NBFIs in the industry’s asset base has been stagnant at 11 percent for the last few years. 

The SBP’s chief said the integrated Pakistan Stock Exchange (PSX) will provide a level-playing field to local as well as foreign investors. “PSX will enhance the culture of saving and investments and provide a tool for the growth of businesses and the economy,” he said.

Chairman Zafar Hijazi at SECP said NBFIs have been growing at a slow pace during the last 15 years. —Salman Siddiqui