Last year’s agri-credit target met, but borrowers fall

SBP trying to improve farm productivity, particularly through credit support

KARACHI: State Bank Governor Tariq Bajwa has said Pakistan is a low productivity economy in terms of agriculture and the central bank is making efforts to bring improvement, particularly through credit disbursement.

Talking to a delegation of the Pakistan Business Council (PBC) that called on him and the senior management at the State Bank of Pakistan (SBP) headquarters on Friday, Bajwa pointed out that the government had set the agricultural credit target at Rs1.001 trillion for financial year 2017-18, but it was a broad target.



“Though last year’s target was largely met, but the number of borrowers actually went down. It implies that the money was going towards processing, but it was not going towards production,” he said.

The governor said the agricultural sector was now specifically focused on the availability of pesticides and fertilisers. The SBP is also contacting the private sector for agricultural extension services in order to boost productivity.

Highlighting positive aspects of the economy, Bajwa emphasised that a recovery in exports, which started in the second half of FY17 and continued in the current fiscal year, bode well for the national economy.

“Exports have shown positive growth over the past six months; in fact, during the last three months, exports have grown 13.2%, which shows that the decline seems to have finally reversed,” he remarked.

Bajwa pointed out that data of first two months of the current financial year showed a recovery in key external indicators, particularly remittances, exports and foreign direct investment.

“Worker remittances grew 13.2% to $3.5 billion in Jul-Aug 2017 and inflows from all major corridors were higher compared to Jul-Aug 2016.”

He was of the view that the country’s economy was increasingly becoming attractive for investment with continuation of supportive economic policies. “I believe at this juncture, it offers a lot of opportunities for businesses to grow and expand,” he said.

Bajwa noted that an accommodative monetary policy had played a key role in providing boost to private sector credit demand.



The policy rate has come down from 10% in October 2014 to only 5.75%. Historic low interest rates were instrumental in pushing private sector credit growth to 16.8% in FY17 compared to 11.2% a year ago.

The overall expansion in the private sector credit stood at Rs747.9 billion in FY17. “About 40% of the expansion in credit was meant for fixed investment,” he said.

On the supply side, a healthy deposit growth improved liquidity of the banking system.

Published in The Express Tribune, September 16^th, 2017.

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