KARACHI: During the first 10 months of the ongoing 2017-18 fiscal, the government borrowings from the State Bank of Pakistan (SBP) stood at a record Rs2 trillion.
By May 11, the latest SBP data reflected that the government borrowing had reached Rs2 trillion mark – more than double the amount it had drawn in the corresponding period of the last fiscal, FY 2016-17.
During the last year of the outgoing government, the fifth, the borrowing from SBP has touched a new high in comparison to the last five years.
In FY17, the total government borrowings stood at Rs710 billion versus net retirement of Rs386bn in FY16. On the positive side, with the State Bank’s liberal supply of money, the commercial banks have been spared, allowing them to extend loans to the private sector.
Increasing the liquidity of the banking industry, the government has paid back Rs1.1tr of the scheduled bank loans during the period under review. Despite greater availability of credit, the private sector’ borrowings remained at best tepid, the credit growth in comparison to fiscal FY17 remaining in the minus.
During this period the credit offtake was Rs517bn, compared to Rs519bn in the corresponding months of last year. Though almost the same, it was expected that the private sector would play a greater role for growth during this year.
The government’s spending it seems would remain a key driver of the economic growth, particularly its development projects under the China Pakistan Economic Corridor. The country had kept Rs1tr development budget for FY18.
Despite the cheaper availability of credit owing to low inflation, the investors remained shy.
Compared to the previous year, the government and the SBP both anticipate higher economic growth in FY18, the political uncertainty being the only probable spanner in the works.
