PPAF asked to provide loans on subsidised rates

Governor State Bank of Pakistan (SBP) Dr Shamshad Akthar on Thursday asked the Pakistan Poverty Alleviation Fund (PPAF) to provide loans on subsidised rates in rural areas as strengthening the micro-finance industry was badly needed in the country.
"The country is facing several challenges on economic front due to surge in oil price in the international market. Every country in Asia is seen under inflation which would increase," said the SBP governor while addressing the launching ceremony of PPAF project 'Programme for Increasing Sustainable Microfinance (PRISM)' for financial sustainability and expansion of micro-finance organisations in the country. She said oil prices have reached $144 per barrel with speculations that it would rise up to $175-200 per barrel.
Urging the PPAF and other institutions to remain focused on rural areas, she said the network of micro-finance clients should be enhanced upto three million people by the end of 2009.
The SBP governor said the global economy has been changing fast bringing the country into a stressful economic environment, adding that increasing fuel and food inflation is a challenge for the country.
Citing World Bank report, she said, the food inflation would keep rising in 2008 and 2009 and Pakistan will face tough time in this scenario. She said these challenges could be overcome by adopting comprehensive strategy of working harder to enhance agriculture yield.
Dr Shamshad said government could not afford the increasing prices which may create micro-economic imbalances, adding that it was also unable to generate income resources overnight so it had to take measures to cut inflation and provide safety to the poor.
She said that social safety networks have to be established to save the poor and low-income people. Dr Shamshad said the SBP in collaboration with finance ministry is preparing management policies and fiscal restraints to cut inflation in the country. She defended the government cut on subsidies. The focus is on the particular sectors for provision of subsidies to overcome challenges, she added. The SBP governor assured the PPAF that central bank would cooperate with latter for strengthening the micro-finance industry in Pakistan to provide relief to the people.
Country Programme Manager for International Fund for Agriculture Development (IFAD) Ya Tian appreciated the efforts of PPAF for launching the PRISM. He said that the programme was designed to facilitate micro-finance and expressed the resolve that IFDA would play its due role in the poverty alleviation.
The US $45 million programme (supported by IFAD) is in direct response to the current environment that focuses on micro-finance organisations that have or are approaching financial sustainability and are positioned to substantially expand their operations.
Chief Executive Officer PPAF Kamal Hyat urged upon SBP to enhance co-operation with PPAF for strengthening the micro-finance industry. He said that with the co-operation of 72 organisations, the PPAF has reached 118 districts and reiterated his resolve to go forward to professionalise the civil society.
The $45 million IFAD-supported programme has been launched for financial sustainability and expansion of micro-finance organisations. The outcomes of the programme would enable micro-finance institutions to diversify their resources base, accessing commercial organisations for funding to encompass rural areas.