In a landmark move, the State Bank of Pakistan (SBP) has set an ambitious agriculture credit target of Rs2,250 billion for the ongoing fiscal year 2023-24, emphasising the pivotal role of the agriculture sector in the country's socioeconomic development.

SBP Governor Jameel Ahmad commended the robust performance of the agriculture sector, highlighting that despite facing various challenges, including floods, agriculture credit disbursements reached an impressive level of Rs1,776 billion during the fiscal year 2022-23. He said this marked a significant year-on-year growth of 25.2%, achieving 97.6% of the overall target of Rs1,819 billion.

Expressing optimism about the sector's strong recovery, the governor projected a real GDP growth in the range of 2-3% for FY24. “The disbursement target for the current fiscal year was set at Rs2,250 billion, representing a substantial 26.7% increase from the previous year,” he noted. 

The governor urged banks to intensify their efforts to not only meet but also surpass this ambitious target.

Acknowledging challenges, particularly attrition of borrowers, the governor outlined SBP's commitment to engaging with each bank individually to develop plans and strategies for a sustainable increase in agricultural borrowers. He advised banks to enhance their agri-finance capacity and establish partnerships with microfinance institutions (MFIs) to expand the outreach of agriculture and rural finance services.

Highlighting the critical need to improve farmers' productivity, Governor Jameel Ahmad urged banks to collaborate with agriculture universities, provincial agricultural departments and other stakeholders. He emphasised the importance of providing quality inputs, implementing better farming techniques and utilising agritech to enhance productivity.

Meanwhile, Muhammad Azeem Tariq, a senior scientific officer at the National Agriculture Research Centre (NARC), said that the commendable performance of the agriculture sector in the face of challenges, such as floods, leading to a significant year-on-year growth of 25.2% in credit disbursements during FY23, showcased the resilience and adaptability of the sector. “The SBP governor's optimism about a strong recovery and a projected real GDP growth in the range of 2-3% for FY24 reflects a well-founded confidence in the sector's potential.”

“Setting the disbursement target at Rs2,250 billion, a substantial 26.7% increase from the previous year, is a clear indication of SBP's commitment to driving economic expansion through agricultural financing. The call for banks to not only meet but surpass this target underscores a proactive approach to ensuring the sector's robust growth,” he said. 

“The commitment to individual engagement with banks to develop sustainable plans for increasing agricultural borrowers is a strategic move. The emphasis on enhancing agri-finance capacity and fostering partnerships with MFIs aligns with the broader goal of extending financial services to the grassroots level,” the NARC scientist noted.