February 26, 2020 (MLN): The outstanding loans to private sector businesses by the end of January 2020 increased slightly by 1% MoM to Rs.5.3 trillion as compared to the previous month. Whereas, in the month January 2019, it stood at Rs.5.198 trillion, demonstrating only a 3% increase YoY.
The slowdown in global economic activity affected exports and appetite for working capital as the latest data issued by the State Bank of Pakistan (SBP) by type of Financing shows that the outstanding credit to the private business sector for Export financing by the end of January 2020 reached Rs 587.17 billion, jumped by 22% YoY.
Despite the government’s various import substitution policies to encourage domestic producers, capacity expansion activities remained subdued as outstanding loans for working capital requirements remained static as it was in January 2019 i.e. at Rs 2.39 trillion.
Meanwhile, loans to private businesses for investing in long term securities (Fixed Investment) stood at Rs 1.787 trillion, while it was Rs 1.74 trillion by the end of Jan 2019, depicting a scanty increase of 2% YoY.
Similarly, outstanding loans for the purchase of inland bills, import bills and foreign bills amounted to Rs 265.69 billion compared to Rs 252.59 billion recorded in Jan 2019. Whereas, outstanding advances to finance private business sector’s imports locked in at Rs 311.3 billion against Rs 312.23 billion in the same month of last year.
In terms of size of institutions, Rs 471 billion worth of credit was given to SMEs while Rs 4.88 trillion worth of credit availed by institutions other than SMEs.
The detailed analysis of the data revealed that during the period mentioned above, a larger part of the loans to private businesses were availed by the manufacturing sector (Rs 3.157 trillion ), within which the most active borrowers were the producers of textiles ( Rs 1.14 trillion) followed by the producers of food and beverages (Rs 761.4 billion).
Moreover, Electricity and the Gas sector ranked second in financing as outstanding loans to this sector stood at Rs 513.78 billion within which Electric Power Generation, Transmission and Distribution Companies were the most active borrowers with an outstanding amount of Rs 504.1 billion.
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