Pakistan, March 21 -- Lending to the private sector in Pakistan has declined sharply in the current fiscal year. This drop raises serious concerns about economic growth and revenue shortfalls. Recent data from the State Bank of Pakistan (SBP) shows net private sector lending fell to Rs563 billion by March 7, 2025, down from Rs1.98 trillion in December 2024. This marks a loss of over Rs1.4 trillion in just two months.

Even with a 1,000 basis point cut in interest rates, banks and borrowers remain hesitant to engage in long-term credit activities. As a result, private sector credit growth has been low for the past three years. This lack of activity contributes to weak economic performance, with average GDP growth at only 1.7%, which is bel...