Pakistan’s CiC Drops to 10-Year Low

Pakistan’s Currency in Circulation (CiC) has hit its lowest level as a percentage of Gross Domestic Product (GDP) in nearly a decade. As of August 30, 2024, CiC stood at Rs8.88 trillion, reflecting a drop of Rs273.82 billion during the current fiscal year, according to provisional data from the State Bank of Pakistan (SBP).

While the current amount remains higher than the 10-year average of Rs5.81 trillion, CiC peaked at Rs9.4 trillion in June 2024, fueled by Eid-ul-Adha festivities. It has since dropped by Rs517.53 billion, following typical seasonal trends.

As a share of Broad Money (M2), CiC has decreased to 24.93 per cent, a level not seen since 2016. When compared to GDP, it now stands at 8.37 per cent, its lowest since the fiscal year 2015.

Beyond seasonal factors, this shift is driven by increasing public savings in banks, with deposits rising 17.6 per cent year-on-year to Rs30.71 trillion as of August 2024. The rising adoption of digital payment methods has also played a key role. In the third quarter of FY24, 83 per cent of the 844 million retail payments processed by banks and electronic money institutions (EMIs) were digital transactions.

Pakistan’s digital payment system, including the Raast platform, has significantly improved the efficiency, accessibility, and security of financial transactions acrossthe country.