SBP says it has not extended any fresh loan to govt since promulgation of SBP Amendment Act, 2022

In response to a news report carried by a media outlet, ‘In breach of law, govt borrows Rs239bn from State Bank: think tank’, the central bank said it categorically rejects the content of the article.

“Apropos to the story titled ‘In breach of law, govt borrows Rs239bn from State Bank: think tank’, State Bank of Pakistan (SBP) categorically rejects the content of the article,” it said in a statement.

“It is also regrettable that prior to the filing of this story, the reporter did not bother to contact SBP for verification of the data. SBP further reiterates that no breach of Section 9-C of the SBP Act of 1956 has taken place, as asserted by the reporter.”

The SBP further said that the said story is based on a research report by an Islamabad-based economic think tank, Prime Institute (PI) which prima facie has relied on the data titled ‘Credit/ Loans Classified by Borrowers’, on the SBP website.

“However, this data appears to have been misconstrued by the think tank. Ironically, the reporter relied on an unpublished research report, while failing to corroborate its assertions.

“It is clarified that data in the aforesaid table is calculated on accrual basis which takes into account accretion of interest over time and impact of exchange rate fluctuation in case of on-lending of Special Drawing Rights (SDR) Allocation, received by the Government of Pakistan as a member of the International Monetary Fund (IMF).

“Furthermore, gross amount of lending is netted-off against the government deposits with the SBP. Based on these reporting principles, the increase of net SBP credit of Rs239 billion to the government sector is attributable to constituent elements namely; accrual of interest (Rs110 billion), impact of exchange rate revaluation (Rs84 billion) and decrease in government deposits with SBP (Rs45 billion).

“Needless to mention, the SBP has not extended any fresh loan to the government since the promulgation of SBP Amendment Act, 2022.”

The central bank said since the discontinuation of borrowing from the SBP, the government has repaid SBP debt of Rs2,017 billion.