Wednesday, 20 August 2014
State Bank of Pakistan was quite upbeat about the trend in government borrowings from the banking system for budgetary support at the time of release of its Third Quarterly Report in July, 2014. Large inflows into Pakistan Development Fund (PDF) received as a capital grant from a friendly country had helped reduce government borrowings from the SBP quite significantly and the authorities were able to contain fiscal borrowings from SBP within the limit agreed with the IMF for end-March, 2014. On a cash basis, the government had borrowed Rs 436.9 billion for a budgetary support from the banking system, which was almost half the amount borrowed in the corresponding period of FY13. A sharp reduction could also be attributed to other government efforts to contain budgetary deficit and the availability of non-bank funding. A reduction in government borrowings motivated the commercial banks to shift their focus towards private sector, with the result that private sector credit expanded as much as 10 percent during period of July-March, 2014, which was more than double the growth realised during the same period last year.