“Higher borrowing will push inflation to the next high level as core inflation (non-energy and non-food) has continued to remain on an uptrend for quite a long time,” he said. In fact, the revenue growth fell short of the rise in current spending as well as non-interest expenditure. Resultantly, the outstanding loans to the private sector came down for the first time in first seven months (July-January) of the current fiscal year 2019. “Credit to private sector may continue to drop following a staggering 4.5-percentage-point increase in key interest rate (since January 2018 to a six-year high of) 10.25% at present,” Kumar said. “The drop in credit (to the private sector) indicates shrinking domestic demand and a slowdown in GDP (gross domestic product) growth,” he said.

Source: The Express Tribune February 26, 2019 03:00 UTC