The increasing trend of oil prices and other commodities at the international level compelled the State Bank of Pakistan to enhance the interest rate to 9.75 percent but surprisingly, this higher rate of interest did not affect the trend of investment in the country as the private sector borrowing jumped by 155 percent to Rs 911 billion during the eight and a half months of the current fiscal year as compared to Rs 357 billion during these months in the previous financial year.
The data, issued by the central bank of the country shows the trend of increasing economic activities in Pakistan which may ultimately lead to the achievement of targeted economic growth during this year. This is the biggest borrowing in terms of percentage for the last five years. In the fiscal year 2021, total borrowings had stood at Rs 766 billion.
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The government’s target of economic growth for the ongoing fiscal year is 4-5 percent. To the economic analysts, this target is appreciable as the country is facing the issues such as the Covid-19 pandemic, rapidly increasing level of commodities prices globally, and a widening trade deficit. As far as the performance of the banks is concerned, all banks did a lot in this regard.
The borrowing to the private sector from the conventional banks stood at Rs 567 billion during the period from July to Mid- March in the current fiscal year which is Rs 174 billion higher than the credit take-off during this period in the last fiscal year. The private sector took Rs 127 billion from the Islamic banks during the period, under review in this fiscal year as compared to Rs 71 billion during the same period, last year.
From the Islamic branches of the conventional banks, the private sector achieved a loan, worth Rs 217 billion during the first eight and a half months of the ongoing fiscal year as compared to Rs 111 billion during the same period in the fiscal year 2020-21 which is almost double. The present government has encouraged investors at all levels to make investments in all economic sectors.
The Large Scale Manufacturing sector and Small and Medium sector, are both important sectors that have done well not only in the current year so far but their performance during the last financial year was also laudable.
