Congratulations! January saw credit to private sector rise for the fourth straight month. But, then, things aren always exactly as they may seem.
Data released by the central bank show that the smallest increase since September could have been even smaller (actually, a net decline), had it not been for a gigantic sum of Rs19.47 billion borrowed for investment in securities and shares.
After borrowing a little more than Rs181 billion in the last quarter, private consumers and businessmen paid off Rs7.5 billion in January - raising doubts over the theories of economic recovery.
While a major retirement of Rs12.2 billion by those involved in chemical industry is mainly to be blamed, SBP data reveal that borrowers from the textile sector, the countrys biggest forex earner, also paid off Rs6.2 billion last month.
Meanwhile, poor old consumers remained on the sidelines by retiring Rs7.3 billion of debt, their biggest since September 2009.
These disappointing numbers point to one thing and one thing alone: the recovery so far is only in the head; as long as the non-IMF foreign inflows don pour in the country, the government will keep gobbling up the share of private sector credit, hence a limping economy.
News from the street somewhat validates the theme. Two separate polls recently conducted by Gallup Pakistan revealed that 58 percent of Pakistani citizens believe the state of their personal finances deteriorated, with some 43 percent citing inflation as the biggest problem faced by the country.
That, in itself, is a double-edged sword. If inflation is the real threat, which the analyst community also generally believes, then the central bank won be able to ease interest rates any time soon. This implies tighter credit conditions in the economy at large.
In other words, there are more troubled waters ahead than whats being expected - and there will be just one bridge to cross it: net foreign inflows, if it exists.
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