Macroeconomic indicators are showing an optimistic picture of the economy of Pakistan as private sector credit off-take is more than doubled in the first eight months of the current fiscal year.
State Bank of Pakistan had announced in its monetary policy that the economic growth rate during the ongoing fiscal year will be 4-5 percent. The government did not take the loan from the SBP therefore the room with reference to the liquidity was created in the country for the private sector to play effectively.
As per the report of the SBP, the private sector’s borrowings almost doubled during the period from July to February in the current fiscal year. The data shows that the banks’ loans to the private sector increased by 116 percent to Rs 874.3 billion during the first eight months of this fiscal year as compared to Rs 403.6 billion, taken by the private sector during the same months, last year.
The government’s borrowing plunged by 42 percent to Rs 634 billion during the period, under review as compared to Rs 1,088 billion during this period, last year. The banks gave by around 150 percent high loans to Rs 557.5 billion to the private sector during the first eight months of the current fiscal year as compared to Rs 222.6 billion during these months, last year.
All the banks enjoyed a high profit. For example, HBL earned Rs 62 billion during the last calendar year, showing the high level of banking, big potential in the economy, and availability of liquidity. The good flow of foreign remittances for the last about two years made the availability of liquidity smooth in the country.
The borrowing from the Islamic banks moved up to Rs 114 billion during the first eight months of this financial year as compared to Rs 74 billion during the same period, last year. The number of loans, forwarded to the private sector by the branches of Islamic banks came to Rs 203 billion during the period from July to February in this fiscal year as compared to the number of loans worth Rs 107 billion forwarded to the private sector during the first eight months of the previous financial year.
The report of the central bank indicates that the biggest share in the borrowing was of the housing and construction sector for the last more than a year. Despite the high level of incentives, given to the housing and construction sector by the government, other sectors of the economy, including LSM and SMEs also played very well during the last and current fiscal years.