Pakistan reacts to credit crisis

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Asim Akhtar

2008-10-11

ISLAMABAD, Pakistan, Oct. 8 — With a credit crisis in the U.S. and Europe, Pakistani banks have reacted by enforcing stricter loan requirements. Pakistani business leaders say companies must push the government for more transparent fiscal policies, saying such measures could help spur growth.

South Korea and Pakistan were once predicted to be the fastest growing economies in Asia. Many believe that the right fiscal policies will help Pakistan prosper.

According to Nassar Ahmed, co-founder of Ahmad Capital LLC, emerging countries are often times addicted to growth and it takes good leadership to be able to make the right decisions in order to have sustained growth.

Many countries in the world have seen debacles in their credit markets exacerbated by events in the U.S. and European credit markets. While billions of dollars have suddenly been removed from the credit system, Ahmed says emerging markets are more fortunate because they have less credit in their system and will suffer slightly less.

Nonetheless, in Pakistan, the impact is felt as banks have less credit to offer.

“It is much tougher to get a loan, regulations have gotten tougher. Over the past few years, we saw a sudden surge in lending for consumer goods,” said Muhammad Amin, a former vice president at the National Bank of Pakistan.

Ahmed calls for companies in Pakistan to push for a stronger legal framework and greater transparency.

“Access to credit is generally good but you can have too much of a good thing. You cannot give credit to people that do not deserve it because of misuse,” he said.

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