The monetary and credit profile released by the State Bank of Pakistan for the week ended October 01, 2005 indicates that government borrowing from the banking system has risen again but is contained to Rs 22 billion by the close of 1st quarter of FY06.
This comes to about 16.7 percent of the size of government borrowing (Rs 120 billion) provided in the Credit Plan for FY06 for the whole year. However, it was in sharp contrast with last year when in the corresponding period the government was able to have retired an amount of Rs 7 billion of the debt already contracted.
The entire borrowing was made for meeting budgetary shortages as other segments of government borrowing showed a net retirement of Rs 14 billion mainly on account of commodity operations.
Adjusted for this retirement element, budgetary borrowing during the year so far worked out to Rs 36 billion compared with Rs 26 billion last week and Rs 59 billion on 17th September, 2005.
A break-up of the budgetary borrowings revealed that while indebtedness of the Federal government to the banking system increased (up Rs 26 billion) over the week that of the provincial governments declined (down Rs 15.5 billion). The increase in Federal government's borrowing mostly came from the central bank where its borrowing increased from Rs 8.5 billion the last week to Rs 70 billion as on 1st October, 2005.
Its borrowing from the scheduled banks, however, showed a net retirement of Rs 46 billion on October 01 compared with a lower retirement of Rs 10 billion on 24th September. Decline in provincial governments borrowing was entirely on account of State Bank (down Rs 15.5 billion) while borrowing from scheduled banks remained unchanged at Rs 5.9 billion.