Government borrowing from State Bank and banks surges to Rs 262.7 billion

KARACHI: The government borrowing from central bank and scheduled banks have seen on the rise for meeting its expenses, swelling to Rs 262.7 billion in the recent days, the State Bank of Pakistan (SBP) reported.

The government has borrowed Rs 69.88 billion from the central bank for budgetary support since July to October 28 of 2011 compared with Rs 139 billion loans transferred to it in the same period of last financial year.

The current borrowing is almost 50 percent lesser as against the amount of last year. The government made this borrowing through having remained cautious to side away from it for past couple of months.

The borrowing from central bank under controlled was observed under-controlled from the government side that resulted the cut in discount rate in the recent monetary policy.

Moreover the government’s borrowing from commercial banks has been unabated particularly through T-Bills since the start of the current fiscal year.

Its borrowing from the commercial banks stood at Rs 192.8 billion from Jul-Oct 28, which is 248 percent higher than the amount of previous year.

The analysts said that the government would continue borrowing from the banking system to support fiscal operations. The government’s borrowing is likely to cross the limit of Rs 308 billion that it set for the commercial banks in the current fiscal year. It will continue auctions of T-bills and loans from banks are going to be a major factor in destabilising the macro-economic indicators of the country.

According to latest auction calendar for T-bills and Pakistan Investment Bonds (PIBs) during the second quarter of the current fiscal, the government intended to borrow Rs 1,070 billion from the banking system. The private sector credit has decreased sharply as its data shows it deposited Rs 37,158 billion to commercial banks as interest and assets in the three-and-half-month period. The private credit showed that negative growth in last year stood at Rs 3,094 billion.

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