Govt borrowing rises by 100pc

[Naveed Yaseen]

KARACHI, Oct 6: Government borrowing rose over 100 per cent in the first 11 weeks of the current fiscal year, State Bank of Pakistan data showed.

The government borrowed a total of Rs173.23 billion ($2.21 billion) from July 1 to Sept 13, all of which was covered by the SBP.

The government borrowed Rs179.44 billion ($2.29 billion) from the SBP, and paid Rs6.21 billion ($79 million) to other banks, according to the data.

Last year, a total of Rs85.7 billion were borrowed from July 1 to Sept 15, out of which Rs2.9 billion were borrowed from the SBP and Rs82.8 billion from other banks.

Analysts said that the government borrowing increased due to large underlying budget deficit which includes debt-servicing, and backlog of payments and subsidies.

Commercial banks were also feeling the liquidity crunch and were not participating in auctions of government securities, such as the treasury bills, or were even reducing their holdings of government securities.

The government has made a commitment to cut quarterly net borrowing from the central bank to zero in order to help control inflation running at over 25 per cent.

The government borrowed Rs689 billion from the central bank for budgetary support in the 2007-08 fiscal year while it repaid Rs134 billion to other banks.—Reuters

http://www.dawn.com/2008/10/07/ebr7.htm