Impact of re-basing on Pakistan's economy.

Byline: Nazir Ahmed Shaikh

A credible statistics is instrumental in planning and economic development. Although it was too late but rebasing is an appreciable act on the part of the government. Base rate is decided in order to enhance transparency in the credit market and ensure that banks pass on the lower cost of fund to their customers. Loan pricing will be done by adding base rate and a suitable spread depending on the credit risk premium.

The United Nations has developed the System of National Accounts (SNA/1993) for standardizing the national income accounting across the globe. The National Income Accounts (NIA) are comprehensive, consistent and flexible set of macro-economic accounts based on internationally agreed concepts, definitions and accounting rules.

The NIA statistics are compiled by the countries to meet the needs of governments, private analysts, policy makers and decision takers. The major use of these statistics are to assess how a country's economy is growing or contracting over short to medium term.

The economic and financial analysts are particularly interested in the behavior of an economy at various stages in the economic cycle. It is quite common to see analyses that compare the extent to which an economy has emerged from a recession compared with that of earlier stage.

The changes over time as observed in the current price estimates depict a combination of a change in prices and a change in the underlying volumes. Therefore, compilation of estimates adjusted for the effects of price change (i.e. constant price or "volume" estimates) is an important component of any national accounting system.

Basis points are the unit of measure used in finance to describe the percentage change in the value of financial instruments or the rate change in an index or other benchmark. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form. Likewise, a fractional basis point such as 1.5 basis points is equivalent to 0.015% or 0.00015 in decimal form. The increase from 10% is either 50 basis points (which is 10.5%) or 500 basis points (which is 15%). Although basis points primarily designate yields and interest rates, they may likewise refer to the percentage change in the value of an asset such as a stock. For example, an analyst may describe how a stock index rose 134 basis points throughout the trading day. This represents a 1.34% increase in the value of that index.

The ministry of planning and the...