The State Bank of Pakistan failed to place the latest monetary and credit profile on its web site for the third week in succession. It has never happened in the history of the State Bank that it failed to produce the monetary survey during this period of the year.
The last monetary survey released by the State Bank pertained to November 12, 2005, which was placed on its web on 24th November.
Ever since the introduction of the new balance sheet pattern for weekly returns in July 2005, which are statutorily submitted by the scheduled banks to the central bank, the officials responsible for production of monetary survey at the State Bank are facing difficulties in preparing the all important set of policy information because of confusion with respect to various items/broad heads of the new balance sheet, which now club in numerous items previously available as independent entries and were any way critically important for the preparation of the monetary survey.
For instance, looking at the new weekly returns of scheduled banks, one cannot now independently construct the NFA of the scheduled banks because entries like 'Borrowings from banks abroad' on the liabilities side and 'Foreign Currency held in Pakistan' and 'Balances with banks abroad' on the assets side are now clubbed with 'Borrowings'; and 'Cash and balances with treasury banks' and 'Balances with other banks' respectively.
Similarly, one cannot arrive at the figure of 'deposit money' or even M1-important ingredients of overall 'money supply', because entries like 'Demand liabilities in Pakistan' and 'Time liabilities in Pakistan' have been clubbed with a general entry titled 'Deposits and other accounts'.
More or less similar is the case of 'Private sector credit', which previously was reflected by the entry 'Loans and advances other than those to banks' now clubbed with 'Gross Advances', 'Provisions' and 'Advances-net of provisions'.
Strangely enough, the State Bank itself is following the same old pattern of reporting other than the quarterly, half-yearly and annual accounts, which are being reported on the new pattern.
Business Recorder is tempted to suggest to the SBP authorities that the new pattern may be adopted only for quarterly, half-yearly and annual accounts while returns previously being supplied for monetary estimates should be restored.
Notwithstanding the failure of the central bank to produce the monetary surveys on time, a look at the balance sheet of the Issue Department of the State Bank revealed that the currency in circulation so far during FY06 (viz., during July 01 to December 10, 2005) surged by nearly Rs 128 billion.
As per last monetary survey, currency in circulation up to 3rd November, 2005 had risen by Rs 89 billion compared with Rs 107 billion in the corresponding period of last year.
On the other hand, deposit money by 3rd November 2005 had declined by Rs 34.6 billion restricting increases in money supply to just Rs 54.7 billion. It is interesting to note that last year up to June 30, 2005, currency in circulation for the full term of FY05 rose by only Rs 136 billion.
Within a figure of total monetary expansion of about Rs 480 billion in FY05, this gave a deposit money figure of 344 billion for the last year. The continuing draw-down of net foreign assets (NFA) of the banking system so far during FY06, however, implies that incremental deposit money during FY06 would remain in the negative range as a large part of bank deposits may be spent to buy foreign exchange from the banking system.(Feature Report by [email protected])
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