Government borrowings down significantly

Islamabad –– The government borrowing from State Bank of Pakistan SBP that surged to “a very high level of Rs 315 billion during December 2010 has been brought down significantly.”

This information was given Tuesday to Monetary & Fiscal Board MFB meeting chaired by Finance Minister Dr. Abdul Hafeez Shaikh.

SBP Governor Shahid H Kardar briefed on recent developments on monetary side. Broad money growth was recorded 9.3% as compared to 5.5% last year. With rising international commodity and oil prices, “inflationary pressure is persisting,” he said. Government borrowing has also been a factor even though borrowing from SBP that surged to a very high level of Rs 315 billion in December, 2010 have been brought down significantly.

Kardar cautioned going forward deficit should be brought down and reliance on SBP borrowing be further reduced. More importantly, share of private sector in credit expansion needs to be increased to support investment requirements. Foreign financing in Budget also needs to be increased so that domestic resources can be freed for private sector financing.

Finance Secretary Dr.Waqar Masood said revised growth target was 2.4% and next year it has to be accelerated to make up due to floods and consequent slow-down in economic activities. External sector rendered extra-ordinary performance on 27% exports growth & 22% remittances growth so far in current fiscal year. Besides strengthening current account and level of reserves, these developments had positive effect on exchange rate that remained stable during the year. Fiscal position improved considerably from first part of fiscal and significant adjustment will take place relative to last year.

Dr Shaikh hoped MFB deliberations will lead to better economic coordination and challenges facing economy will be coped in coordinated manner by all institutions.

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