The government budgetary borrowing from the banking system till March 12 has reached Rs 168.208 billion against the annual target of Rs 98 billion. Of this, the borrowing of the central government stood at Rs 160,967 million and the provincial governments Rs 7,241 million.
According to the data released by the State Bank of Pakistan on Monday, the central government borrowed Rs 194.509 million from the central bank and was able to retire Rs 33,541 million of scheduled banks.
The excessive borrowing is attributed to the soaring budget deficit.
It may be mentioned that net borrowing for the corresponding period last year (July-March 12, 2005) was Rs 20,450 million. Till February 18, 2006 this was Rs 144,670 million and rose by over Rs 24 billion in less than four weeks.
The SBP data further showed that the credit to private sector amounted to Rs 326,366 million during July 2005-March 11, 2006 as against Rs 323,495 million. Though it showed a marginal increase of less than Rs 3 billion, in reality in terms of percentage it is far less than in the corresponding period of last year.
According to monetary aggregates (growth rate) the credit to private sector rose by 19.02 percent, which in the corresponding period last year was 26.67 percent. It reflected a tightening monetary policy credit to public sector enterprises (Wapda, KESC, PIA, PTC totalled Rs 2,838 million.
The growth in monetary assets (MA) till March 6 was Rs 288,036 million, showing a growth of 9.61 percent against Rs 312,005 million during the corresponding period of July 1, 2004 - March 12, 2005, when the growth was 12.55 percent over the previous period.
It may be mentioned that the credit policy envisaged Rs 330 billion credit to the private sector during the year. This limit is expected to be breached.
An interesting feature of the credit plan was to save Rs 10 billion from the public sector entities during the year, but these have already sucked in nearly Rs two billion till March 11, 2006.
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