KARACHI: The rate of non-performing loans has more than doubled in Pakistan, while the demand for loans for economic activities has recorded a decline of 5.5 percent.
According to the latest data of the banking sector, during the nine and a half months of the current financial year, the provision of loans for non-productive expenses by banks has more than doubled, while the rate of loans for promoting economic activities has increased by 5.5%. There has been a percentage reduction.
According to the weekly report issued by the State Bank, commercial banks have provided loans of 3.06 trillion rupees to the federal and provincial governments during the period of July to April this financial year, which is 944.54 billion rupees during the same period last year.
On the other hand, the volume of loans provided to the private sector decreased to 219.92 billion rupees, which was 1.19 trillion rupees last year. Yusuf Rehman, head of research at ASB Securities, said that financing is being taken out of the economy and provided to the government which is not pleasant for the economy.
During the current fiscal year, Pakistan’s interest payments are likely to increase to Rs 5.5 trillion, which is 6.5 percent of GDP, as against the initial estimate of 4.7 percent of GDP, or Rs 3.9 trillion.
A 400 basis point increase in the central bank’s policy rate during March-April has boosted the volume of interest payments to 21 percent. What is the increase?
On the other hand, continuous supply of currency in the market shows that the government is printing currency notes, increase in loans for non-development expenditure, decrease in commercial loans and printing of notes, all three are bad indicators for the economy.