June 01, 2022 (MLN): The total money supply circulating within the economy in April 2022 has been recorded at around Rs28.92 trillion, according to provisional accounts on Monetary Aggregates for the month maintained by the State Bank of Pakistan (SBP).
The money circulating within the economy until March 2022 was Rs28.64tr while, until the corresponding month of last year, the figure was Rs26.44tr. This means that the money supply has increased by around 1% MoM whereas, on a year-on-year basis, it has jumped by 9.4%.
Having broken down the overall money supply into broad categories, the SBP data shows that Rs7.8tr were circulated as notes while Rs13.29tr accounted for transferable deposits which comprise all deposits that are exchangeable on demand at par without penalty/restriction.
The currency circulated as notes which have been high in Pakistan relative to other developed and emerging economies because of the high informal economy rose by over Rs0.65tr or 10% over the year.
Meanwhile, it is worth mentioning that in 2018 when the PTI government came into power, the total currency in circulation in the country was approximately Rs4.3tr. From then until the beginning of the Covid period in March 2020, this figure has surged to Rs5.6tr. In May 2020, notes in circulation crossed the Rs6tr mark, and since then it has consistently stayed above that mark.
This reflects higher cash withdrawals by depositors to meet needs amid pandemics. Moreover, Cash distributing schemes amid Covid-19 as a relief measure can also be considered as a significant contributor to the surging circulation of currency.
Apart from this, other deposits constituted Rs3.96tr in April 2022, dropped by 1% MoM while on yearly basis, deposits climbed up by 13.8% YoY. Other deposits represent all claims other than transferable deposits in national or foreign currency that are represented by evidence of deposits.
Similarly, coins in circulation remained at Rs9 billion in April 2022, up by a 23million compared to March 2022 while, on yearly basis, it has increased by 10mn.