Monetary policy

State Bank of Pakistan (SBP) has issued Monetary Policy Statement (MPS) for the first half of the fiscal year 2003-04 (FY-04) on l9th January, 2004.
As per this MPS, the private sector availed of credit amounting to Rs 156.8 billion during July-December 27, 2003.
The sectoral distribution of the credit as given in the Figure 2 of the MPS is, however, based on July-November, 2003 data.
The share of the agriculture sector has been put at 9 percent or Rs 11 billion. As per the SBP's report for the first quarter of FY-04 (July-September, 2003) released in the end December, 2003, a total sum of Rs 14.322 billion was disbursed in that sector during that quarter (Table 2.6).
It appears that the disbursements by the Zarai Taraqiati Bank Limited (ZTBL) and the Punjab Provincial Co-operative Bank (PPCB) have not been accounted for in the MPS.
As the credit provided by these banks also forms part of the credit expansion in the country, it ought to have been made a part of the data flashed through the MPS.
With regard to the interest rates, it has been asserted that "Moreover, the cut-off yields on various government papers also came down.
For example, yield on 6 months T-bills decreased from 1.35 percent in July, 2003 to 1.66 percent in December, 2003.
"How can the change from 1.35 percent to 1.66 percent be termed as "decrease"?
As for borrowings from the banking sector for meeting the fiscal deficit it has been mentioned that "Therefore the Government budgetary borrowings from the banking system remained below end December, 2003 target of Rs 53.1 billion."
The amount of borrowing has, however, not been specified. In the quarterly report for July-September, 2003, SBP had put the amount at Rs 9.9 billion for that quarter (Table 3.3). It is thus not possible to assess the trend.