SBP observed loan a good retirement by the fertiliser sector in 1HFY24

The fertiliser sector made retirements during H1-FY24 compared to substantial borrowings in the same period last year. This was stated in the State of Pakistan’s Economy Report for H1-FY24 released today by the State Bank of Pakistan (SBP), adding that Pakistan’s macroeconomic conditions improved during H1-FY24.

Also, a point of great satisfaction is that the real GDP, driven by the agriculture sector, grew by 1.7 per cent in H1-FY24.

Retirements can be attributed to healthy fertiliser offtake in Q1-FY24, particularly of DAP, due to better crop conditions. In addition, a relatively strong financial position also reduced the borrowing requirements of the sector. In anticipation of a hike in gas tariffs, fertiliser companies had increased prices at the beginning of the year. Hence, the delay in the announcement of the hike in gas tariff till November 2023 significantly improved the sector’s financial position. The improved operating margins and better liquidity conditions aided the fertiliser companies in reducing reliance on bank credit.

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