Government borrowing up 86% from State Bank in 15 days

KARACHI: The government’s borrowing from central bank recorded surge of 86 percent in the past 15 days on the account of budgetary supports, State Bank of Pakistan’s (SBP) figures showed on Tuesday.

The central bank has lent fresh amount of Rs 38.556 billion during November 25, 2011 till December 11 to the government, which stood at Rs 44.84 billion on November 25.

The overall government borrowing from the central banks has reached Rs 83.396 billion from July to December 11, 2011. Whereas, the borrowing from the central bank stood at Rs 302.522 billion in the corresponding period of previous financial year.

The borrowing from central bank was under control from the government’s side that resulted in cut in discount rate in the previous monetary policy announcement. However, the rising government’s borrowing may force SBP to take tough measures for controlling money supply and inflation.

Moreover, the government’s borrowing from commercial banks has been unabated particularly through Term Finance Certificates (TFCs), Pakistan Investment Bonds (PIBs) and treasury bills (T-bills) since the start of the current fiscal year.

Its borrowing from the scheduled banks stood at Rs 691.330 billion by December 11 with fresh loans of Rs 37.59 billion in the past 15 days.

Analysts said that the government would continue borrowing from the banking system to support fiscal operations. The borrowings from scheduled banks are mainly through fortnightly auctioning of T-bills and PIBs of 3, 6 and 12-month maturities. It continued to auction T-bills and PIBs for combating crisis in the energy sector’s circular debt and public sector entities such as Pakistan Railways and Pakistan Steel. Alone, the TFCs transaction was swapped into T-bills and PIBs worth Rs 390 billion.

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