Bussiness in Pakistan

1686 Words Aug 17th, 2012 7 Pages
AMB Country Risk Report

September 28, 2011

Pakistan
Country Risk Tier
CRT-5
• The Country Risk Tier (CRT) reflects A.M. Best’s assessment of three categories of risk: Economic, Political and Financial System Risk. • Pakistan, a CRT-5 country, is itself the site of military and terrorist activity. Its fundamental lack of political stability is a challenge to its economic and financial outlook.

Economic Risk
Moderate Low High

• Regional instability and domestic bureaucratic inadequacies challenge this economy that, though recently liberalized by the government, supports a relatively low-income population. • In addition to the need to eliminate terrorist violence in Pakistan, the government must continue to work to
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5 4 3 2 1 0

Legal System

Monetary Policy

Regional Stability

Fiscal Policy

Social Stability

Business Environment

Government Stability

Labor Flexibility

Source: A.M. Best

GDPPERCAPCHART

Financial System Risk: Very High
1,600 1,400

18,000 GDP Per Capita 16,000 Population

14,000

1,200

12,000 1,000 10,000 USD 800 8,000 600 6,000 400

• The banking sector is concentrated and subject to government influence. The government is majority owner of the largest commercial bank in Pakistan. • The impact of the global financial crisis on the banking sector was relatively minor. • Sovereign debt in Pakistan receives a vulnerable rating, which weighs on the private sector’s access to capital. • The insurance industry is regulated by the Insurance Department of the Securities and Exchange Commission of Pakistan (SCP).

4,000

2,000

200

0 Pakistan India Russia China Saudi Arabia Kazakhstan

0

Source: IMF and A.M. Best

Page 3

Millions

3

GUIDE TO BEST’S COUNTRY RISK TIERS
A.M. Best defines country risk as the risk that country-specific factors could adversely affect the claims paying ability of an insurer. Country risk is evaluated and factored into all Best’s Credit Ratings. Countries are placed into one of five tiers, ranging from “CRT-1” (Country Risk Tier 1), denoting a stable environment with the least amount of

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