Monetary figures: Money supply grows 5.68% since start of FY14 Source: The Express Tribune, March 20th, 2014 | By Kazim Alam | Published: March 20, 2014 KARACHI: Money supply in the economy has increased by 5.68% since the start of the current fiscal year as opposed to the growth of 8.52% in the comparable period of 2012-13. According to the latest data released by the State Bank of Pakistan (SBP), the expansion in broad money – commonly referred to as M2 – between July 1 and March 7 remained Rs502.9 billion, which is significantly lower than the monetary impact of Rs650.9 billion recorded over the corresponding period of the last fiscal year. Provisional data on monetary aggregates that the SBP released on March 18 shows the currency in circulation has increased by Rs272.2 billion since the start of the current fiscal year. The increase in the currency in circulation during the same period of the last fiscal year was Rs308.6 billion. Total currency in circulation as on March 7 stood at Rs2.21 trillion, SBP’s monetary aggregates show. Net federal government borrowings for budgetary support from the SBP have been Rs641.3 billion in the current fiscal year. In contrast, these borrowings amounted to Rs117 billion in the comparable period of 2012-13. While net federal government borrowings from the central bank have increased substantially on a year-on-year basis, they seem to have nosedived in the case of scheduled banks. Net federal government borrowings from scheduled banks in the current fiscal year have remained Rs56 billion so far. However, they amounted to Rs762.5 billion in the corresponding eight months of 2012-13. Credit to the private sector has seen significant improvement in the last eight months or so as opposed to the same period in the last fiscal year. It rose by Rs285.7 billion between July 1 and March 7 while the increase during the same period of the last fiscal year totalled only Rs111.1 billion, the latest monetary aggregates show. As for credit to the public-sector enterprises (PSEs), the increase has been Rs65 billion as opposed to Rs42.9 billion recorded in the first eight months of the last fiscal year. In the wake of declining inflation, the government seems to prefer the long-term Pakistan Investment Bonds (PIBs) to short-term treasury bills (t-bills). The year-on-year inflation remained at 7.9% in February due to a month-on-month deceleration in inflation in two of the last three months. That is the reason the amount of debt that the federal government has accumulated through PIBs stood at Rs1.58 trillion at the end of January, up 41.2% from Rs1.1 trillion from January 2013. In contrast, the year-on-year increase in the amount of debt that the federal government has accumulated through the market treasury bills (auction) has been relatively low at 4.3%. In its monetary policy announcement last week, the SBP had stated that the stock of fiscal borrowings from the central bank ‘remains at a higher level.’ “Reducing fiscal borrowings from the SBP will also be critical in keeping the growth in net domestic asset of the SBP within the agreed targets,” it stated. Published in The Express Tribune, March 20th, 2014.
Posted on: Thu, 20 Mar 2014 07:18:22 +0000
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