To understand the economic complexities at hand it is important to trace briefly Pakistan’s economic growth trajectory and experience of structural reforms. Over the last three decades, economic growth has stumbled: While growing around 6-7% in late-1970s-1980s and growth faltered over 1988-2001 to 4.4%. From 2000, efforts launched have resurrected growth to an average of 6.3% over the last few years.
The rise in the wholesale cost of term funding has meant that many non bank and some bank lenders have had to slow the growth of their businesses. The closure, more or less, of securitisation markets for the time being also has made life much more difficult for those lenders which relied heavily on that avenue of funding.