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Salient Features of the Financial Social Accounting Matrix for Pakistan-1989-90

Siddiqui, Rizwana (2004): Salient Features of the Financial Social Accounting Matrix for Pakistan-1989-90.

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Abstract

A financial Social Accounting matrix (FSAM) has been constructed using data from exiting SAM depicting real side of the economy, flow of funds data, and household integrated economic survey data. The constructed FSAM has been used to operationalize financial CGE model to investigate how financial liberalization and governance improvement impact Pakistani economy in general and poverty welfare of its people in particular. The prominent features of the FSAM are: (1) it presents Capital Account in new format by reporting savings by type of institution and reporting investment by origin as well as by destination, (2) it adds a new account under the heading of Changes in Assets and Liabilities. It also reveals changes in assets and liabilities (physical and financial) by type of institutions. The integration of real and financial sides of the economy provide details of real-financial transactions that occur between economic agents during the fiscal year 1989-90.The FSAM reveals wide disparity in asset accumulation by the type of institution which play a pivotal role for growth prospects as well as for poverty reduction. This aspects is particularly important for the case of Pakistan where the policy of limited credit expansion and private sectors limited access to external borrowing is prevailing. The FSAM show: 1. saving rates vary by institution, 2. significant amount of investment destined in three sectors: Textile, F&B, and NMI. (3) Government and non-financial firm receive a large chunk of total credit, (4) NFF’ acquisitions of financial and Physical asset is highest.

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