ISLAMABAD: Minister for Finance, Revenue Dr Abdul Hafeez Sheikh on Tuesday told Senate that Rs. 153.750 billion currency notes were printed during the fiscal year (FY) 2009-10 resulting in reduction of financial intermediation.
The Minister informed in a written reply during the question hour that the issuing of currency notes also resulted in increased currency in circulation.
Currency in circulation has increased by Rs. 263 billion during 2011, showing a year-on-year growth of 19 percent as on February 15, 2011 from June 30, 2010, Hafeez added.
He said the currency to deposit ratio has increased to 33 percent as on February 2011 from 29 percent at end June 2010. The prime reason for this increase in currency in circulation is heavy government borrowings from State Bank of Pakistan for budgetary support.
The government borrowings from SBP essentially means of new money besides being inflationary, he added.
The Minister said that an understanding between SBP and the government to restrict such borrowings at the end-September level of Rs. 1290 billion will help in restraining the printing of new notes and to reduce the currency in circulation.
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