| Pakistan Economy and Microfinance |
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Pakistan has a population of 168.9 million growing at a rate of 2.8% per annum. Pakistan’s economic mainstay is Agriculture, contributing 21.8% GDP and 44.65% employment. In the year 2008-09, Pakistan’s economy weathered the international financial crisis, the costs of war on terror and the policy induced imbalances of the past years. While large scale manufacturing declined, Agriculture sector recorded a 4.7% growth mainly due to performance of the major crops. In 2008, Rupee remained destabilized losing against dollar and the food and commodity prices surged pushing the consumer price index by more than 20%. For 2009, it was estimated that a quarter of the population lived below the poverty line of US$1.25 per person per day. Pakistan’s financial health is still vulnerable and “access to international debt markets remains severely constrained (particularly after the debt restructuring requested by Dubai World). In this environment, funding under the Stand-by Arrangement with IMF has been a key to shore up the country’s foreign exchange reserves and moderate the rupee depreciation.”
The economic processes in the country leave quarter of a population below poverty line and half the population vulnerable to slipping below the poverty line. With high inflation, small producers and farmers find it difficult to meet their daily consumption needs and meet the growing production costs. In this circumstance, with little or no access to any other financial services, low income households find micro finance a great assistance in stabilizing household cash flow and continuing their income earning activities.
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