KARACHI: Credit to private sector grew 8.3 per cent in the outgoing fiscal year, but lending rate for construction industry sharply increased by 40.5pc which made the sector a leading force for growth in economy.

The Economic Survey 2015-16 issued on Thursday covers mostly first nine months and found that the private sector credit off-take was better and growth was higher than 6.6pc of the fiscal year 2015.

The stock of credit to construction industry, which was Rs63.3 billion in March 2015 jumped to Rs92.7bn in March 2016.

According to the survey, credit growth to agriculture fell by minus 0.5pc which badly damaged the overall agriculture growth during the fiscal year 2016.

Overall credit grew by 7.2pc during July-March of fiscal year 2016 as compared to 6.9pc during the comparable period of last year.

In flow terms, credit expansion to private business reached Rs.249bn during July-March of fiscal year 2016 as compared to Rs187.6bn in the corresponding period of fiscal year 2015.

Expansion in credit to private sector was broad-based during fiscal year 2016 and mainly came from construction (40.5pc), followed by electricity, gas and water supply (14.9pc), transport, storage and communication (14.3pc), manufacturing (12.1pc) and textile by (15pc).

Expansion in private sector loans during July-March of fiscal year 2016 was primarily in manufacturing sector that received a share of 82.9pc or (Rs206.4bn), followed by textile (33.1pc; Rs82.5bn), electricity, gas and water supply (16pc; Rs39.8bn), construction (10.7pc; Rs26.7bn) and transport, storage and communication (8.4pc; Rs20.9bn).

Credit to private sector witnessed a significant growth during July-March of fiscal year 2016 for working capital, fixed investment and trade financing categories as compared to the same period of last year.

The gradual increase in credit disbursement for all categories mainly used by major sectors of the economy and particularly notable in production, transmission and distribution of electricity, road transport, construction of roads, telecommunications, sugar, manufacturers of electricity distribution machinery, cement, fertilizer and pharmaceutical sectors.

Credit for fixed investment reached Rs150.1bn (an increase by 78pc) during July-March of fiscal year 2016 as against Rs84.4bn in the fiscal year of 2015, working capital credit amounted to Rs119.2bn (growth by 135.8pc) during the July-March of fiscal year 2016 as compared to Rs50.6bn in the same period of last year.

Similarly, trade financing increased to Rs50.4bn (a marginal growth by 0.44pc) in July-March of fiscal year 2016 from Rs50.2bn in the corresponding period of last year.

Consumer financing recorded a growth of 6.1pc (Rs17.3bn) during July-March of fiscal year 2016 as compared to 6.7pc (Rs16.9bn) during the first nine months of last year.

Within consumer financing, consumer durable witnessed a significant growth of over 110pc during July-March of fiscal year 2016 against the negative growth of 14.4pc in same period of last year.

However, house building loans increased by Rs5.1bn and recorded a growth of 12.8pc during July-March of fiscal year-2016 compared to 0.1bn in last year which recorded a growth of 0.2pc. Noticeable improvement in house building financing was on account of accommodative monetary policy and low policy rate, whereas auto financing also increased by Rs17.3bn (20.4pc) during first nine months of fiscal year 2016 as against Rs13.7bn (21.3pc) in the same period of last year.

Positive growth since fiscal year 2009-10 in auto financing is due to amendment in regulations for car financing which allowed banks to finance cars up to nine years old and high demand for the new models cars which increased sales of local car assemblers.

Conversely, personal loan showed net retirement of Rs4.2bn during the period under review as compared to expansion of Rs4.9bn in the comparable period of last year.

Published in Dawn, June 3rd, 2016

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