Private sector lending drops sharply
The private sector lending has slowed sharply, raising concerns over economic growth and revenue generation, both of which are already underperforming. Despite a 1,000 basis point reduction in interest rates, neither borrowers nor banks are showing interest in long-term lending. According to State Bank of Pakistan’s (SBP) data, banks’ lending to the private sector during this fiscal year has fallen to just Rs563 billion as of March 7, 2025, from Rs1.98 trillion at the end of December 2024 — a sharp decline within just over two months. For the past three years, private sector credit growth has been extremely poor and was evident in the negative impact on growth, which averaged just 1.7 per cent — well below the annual population growth rate of 2.4pc.