Govt. sector borrowing eased over the week

April 15, 2019 (MLN): As of April 5, 2019, the government sector of Pakistan borrowed a net sum of Rs.708 billion from various sources during the ongoing fiscal year.

Going by the State Bank of Pakistan’s weekly report on monetary aggregates, this sum dropped by Rs.35.2 billion during the week as prior week’s borrowing stood at Rs.743.2 billion.

Similarly, the total net borrowing for this period is nearly Rs.41 billion smaller than that counted for the same period last year (Rs.749.1 billion).

The government sector borrowings are divided into three broad categories based on the purpose of loan, which are budgetary support, commodity operations and others.

Split three ways among these broad categories, the net borrowing budgetary support was Rs.876.7 billion, net borrowing for other purposes was Rs.795 million whereas a net sum of Rs.169.4 billion was retired off commodity operations.

The central bank lent out a net of Rs.3.5 trillion to the government sector for budgetary support, during this period.

As we break down the total loan from SBP, it is noted that the federal government borrowed Rs.3.7 trillion, while provincial government paid off Rs.214.8 billion, AJK government paid off Rs.10.45 billion and Gilgit Baltistan retired Rs.8.2 billion.

The other main source of loan for budgetary support is scheduled banks of which Rs.2.62 trillion were retired during current fiscal year.

The major portion of loan from scheduled banks was retired by the federal government, a net sum of Rs.2.58 trillion.

The data point towards federal government’s heavy reliance on SBP for budgetary support as it took loan from the central bank to repay the bulk of loan accumulated from scheduled banks.

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