ISLAMABAD: Commercial bank credit and investments are on the rise in Pakistan on the back of a significant uptick in the economy with 42-year low interest rates of 5.25%, according to a report.
The new monetary policy and the benchmark discount rate, expected to be announced later this week, are likely to strengthen this trend, reported Khaleej Times.
International financial organisations, the ministry of finance and the State Bank of Pakistan (SBP), the central bank, report that the economy is in an expansionary mode and will continue to be so in the next two years.
“We expect gross domestic product (GDP) growth to rise further in fiscal year 2017. The actual GDP growth in fiscal year 2016 was 4.7% – a record high for the last 12 years despite international challenges,” say economists.
According to the SBP, the government envisages a higher GDP growth of 5.7% in fy-17. The banking system will gain further strength and earn larger profits as economic growth increases.
The SBP issued a review of the country’s macroeconomic performance, with a specific reference to the recent monetary policy which ensured a rapidly declining benchmark discount rate and the lowest interest rate of 5.25% charged by commercial banks, a 42-year low.
While, the report quoting IMF said, “Pakistan’s economy is growing at its quickest rate in eight years. Investor confidence has slowly returned to a country that was battered by the global financial crisis.”
Bank investments are rising but deposits are not growing that much, reported the SBP. Credit and investments provided by banks rose in the first half of 2016 compared to the like period of 2015, it said.