The government borrowed Rs 1.4 trillion from banks in 2014-15, while the private sector credit off-take fell by 44 per cent over the preceding year, data of the State Bank of Pakistan (SBP) shows.
The government missed most of the budgetary targets of FY15, thus the impact was visible on borrowing side particularly hitting the private sector. The country failed to achieve the growth rate target, mainly because the private sector could not get support from the banking money despite recent drastic cuts in interest rates.
Falling crude prices succeeded to bring down the inflation to historic low — which remained 4.5pc on an average in FY15 — but the private sector failed to benefit from it either. The failure of Federal Board of Revenue to achieve thrice-revised revenue target forced the government to borrow massively from scheduled banks, which remained limited to Rs171bn in 2013-14.
However, the government avoided to borrow from the central bank, which is inflationary in nature and also a condition for the International Monetary Fund loan. In FY15, the government retired SBP’s debt worth Rs 462bn. The private sector credit off-take decreased to Rs 208.7bn in 2014-15 from Rs 371bn in the previous year, despite low oil prices and 300 basis points cut in interest rate.