Private Sector Reduces Bank Debt Amid Weak Investment

News Desk
KARACHI: Nearly 100 days into the current fiscal year (FY27), the private sector in Pakistan continues to repay bank debt rather than seeking new loans, highlighting a concerning trend of weak investment activity that threatens economic growth.

The latest figures from the State Bank of Pakistan (SBP) reveal that during the first 100 days of FY27, from July 1 to October 9, the private sector retired a net Rs91.8 billion in debt, a significant increase from Rs31.7 billion during the same period in FY26.

This trend indicates a persistent reluctance among businesses to engage in bank financing, a crucial driver of investment and economic expansion.

In FY26, Pakistan’s economy grew by only 3.7 percent, a rate deemed insufficient to create adequate employment opportunities, alleviate poverty, and enhance revenue collection.

The ongoing debt repayment trend raises concerns about the potential for further stagnation in economic activity, which could adversely affect citizens and the overall economic landscape.

Looking ahead, analysts suggest that without a shift in business sentiment towards borrowing, the economy may struggle to recover.

Policymakers and financial institutions are urged to explore strategies that could incentivize investment and stimulate growth in the coming months.