Private sector retires Rs393bn during first 6 weeks

According to Dawn, the private sector retired a net Rs393.4 billion of debt between July 1 and August 15, compared with Rs232 billion in the same period last year. The central bank's figures, published on Monday, also show that lending to the private sector kept falling in the initial 45 days of the fiscal year. Non-Bank Financial Institutions recorded a net retirement of Rs25.3 billion over the same stretch.

Bank advances climbed to Rs1.46 trillion in FY26 from Rs1 trillion a year earlier, yet GDP growth held at 3.7 per cent, according to the report. The government wants the private sector to lift growth above the 4 per cent target for 2026-27, but the outlook is described as bleak. Banks are reportedly favouring risk-free government securities over lending, while high interest rates make private-sector products costlier.

SBP Governor Jameel Ahmad said stabilisation alone was not enough for high and sustainable growth and urged banks to reshape their business models to finance the private sector more. An industrialist, meanwhile, pointed to uncertain politics, tensions in the Gulf, high oil prices, law and order problems, transporter agitation and resistance to the petroleum levy as reasons for weak private participation.