KARACHI — The private sector sharply increased its borrowing from banks in April, breaking months of debt repayments as businesses sought funds for short-term needs.
According to data from the State Bank of Pakistan (SBP), borrowing rose to Rs751 billion as of May 2. In comparison, private-sector borrowing stood at Rs239.8 billion during the same period last year.
By Dec. 31, 2024, total lending to the private sector had reached Rs1.4 trillion, but much of that was later repaid. The latest surge is partly linked to banks trying to meet their Advance-to-Deposit Ratio (ADR) to avoid a 15% additional tax.
The SBP has lowered its policy rate in stages since June 2024, cutting it from 22% to 11%, as inflation dropped significantly. In April, inflation fell to a record low of 0.3%.
Despite the recent increase in lending, business groups have called the latest 100 basis point rate cut insufficient. They continue to urge the SBP to reduce the rate to single digits to boost economic activity.
