If its not for the government itself, then its those semi-government public sector enterprises; but one way or the other private sector borrowers continue to be pushed to the sidelines.
After getting some respite since October 2009, private borrowers were left with little money in February as public sector gobbled up nearly half of the amount lent out to non-government sector during the period.
According to last available statistics released by the State Bank of Pakistan, textile sector businesses paid back about Rs8.5 billion on a net basis during February - its second consecutive net retirement after an average borrowing of Rs15.4 billion between September and December.
A similar story is visible in the loans position of those involved in commerce and trade, chemicals and chemical products and the manufacturing sector as a whole.
Thankfully, however, this may be a seasonal trend, as flow of credit tends to loose its pace in February, as export and agri related financing requirements ease between December and January.
Yet, there are enough reasons to worry.
Looking ahead, credit supply appears weak in the wake of fiscal imbalances and absence of substantial foreign inflows to plug the gap.
Moreover, continued strong credit demand from PSEs and low pace of retirement of outstanding commodity finance loans will continue to exert pressure on market liquidity. The banks have taken their hands off of any fresh commodity financing over and above existing exposure.
In this context, a quick resolution to the power crisis, and its more than Rs200 billion circular debt will be critical for the smooth flow of credit to the private sector.
But productivity isn just a question of credit; while the supply of credit is a key driver of productivity, the quality of loans also tells a lot about the state of economy. And this is where the concerns mount.
According to SBP data, only Rs48 billion or 38 percent of the total Rs123.7 billion loaned as business sector advances during July-Jan period was taken for fixed investment purposes. The rest was borrowed to meet working capital requirements, including Rs38.4 billion needed as seasonal finance.
In contrast, loans for fixed investments equaled about Rs123 billion or 77 percent of the total business sector advances worth Rs159 billion, in the comparative period last year.
But then again, with plenty of idle capacity in various sectors, there is little need for businessmen to expand and incur fix expenditures - not least when the consumer is shying away from making purchases.
Hence, the economy is stuck in a vicious trap; the consumer won borrow aggressively because of high loan costs, which in turn isn likely to taper off any time soon due to risks of second round of inflation and fiscal imbalances.
Never ever in recent history did Pakistan need her Friends, yet most remain silent; with a lukewarm response at best.
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