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“The banks have closed their credit lines to all brokers. I’m the largest broker in Pakistan but even my credit lines have been stalled. This is both a crisis of liquidity and a crisis of confidence” Farrukh Sabzwari, KASB Securities |
Cash-strapped Pakistan is trying every trick in the book to stave off a humiliating default on its mountain of foreign borrowings and inject some life into its moribund share markets. Mirroring the financial crisis elsewhere, the State Bank of Pakistan on October 16 moved to inject liquidity into the country’s financial system, cutting the cash reserve ratio – the amount banks are required to hold in reserve – by two percentage points, to 6%, and promising a further one percentage point cut by November 15.
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