KARACHI, May 5: State Bank Governor Dr Ishrat Hussain said on Wednesday the government would issue Islamic bonds because there stood a great demand of this investment instrument in Muslim countries, particularly the Middle East.
Talking to reporters at the inaugural ceremony of a three-day International Ports and Shipping Conference, the SBP governor said that Pakistan would soon issue Islamic bonds which were quite popular in the Middle East and other Islamic countries.
Referring to some reports about the country's banking system, he said there was a general appreciation about present standing of the banking system. However, he said these reports of the Asian Development Bank only cautioned that the banking system should not fall in line with the financial crisis witnessed a few years back in Far Eastern economies.
Dr Ishrat said that today 80 per cent of banking sector assets were owned by the private sector, whereas some years back about 91 per cent of these assets were with the public sector.
Similarly, the SBP governor said that lending rate had come down to five per cent from around 14-15 per cent, thereby assuring lower capital cost for trade and industry.
Unlike in the past, he said, the exchange rate had stabilized and return in dollar term had gone higher. "Country's external burden came down from 50 per cent of GDP to 42 per cent. Debt service declined to 31 per cent from 66 per cent and is expected to go down further to 23 per cent in next couple of years."
The SBP governor said there were other structural changes in economy, including internal debt burden. Citing an example, Dr Ishrat said that even during the hard days of poor foreign exchange reserves a huge amount of up to $80 million was remitted by a foreign investor.
He said that dividend yield was higher as compared to other countries of the region and a lot of administrative changes had been brought in the tax system to ensure minimum contact between tax collectors and taxpayers.
The introduction of Universal Self Assessment Scheme, he said, was a move in this direction. "Under this scheme, only 20 per cent of cases will be put to audit through computers."