Govt borrowing from banking sector declines
Sunday May 18, 2014
KARACHI: The government reliance on banking sector for financing fiscal deficit showed a significant improvement as borrowing from State Bank of Pakistan (SBP) and scheduled banks stood at Rs 276 billion.
The SBP data revealed the government borrowing from Bank has come to zero after it made a retirement of Rs 287 billion, which was now being maintained as its reserves. On the other hand, the borrowing stood at Rs 1,021 billion during the corresponding period of last year.
Moreover, the government was also able to keep its borrowings from SBP below the International Monetary Fund (IMF)’s target for end-March 2014. In fact, the SBP was able to meet the IMF’s adjusted Net International Reserve (NIR) target for end-March 2014 by a wide margin, the SBP statement said at announcing of monetary policy.
Nevertheless, mainly due to robust growth in worker’s remittances, the external current account deficit at $2.3 billion seemed quite manageable at this point in time. This is because the capital and financial account net flows have also improved to $2.2 billion, considerably easing the pressure on the balance of payments position.
The better-than-projected inflows from the issuance of Euro bonds of $2 billion and other inflows from multilateral sources in April and early May 2014 have improved the SBP’s foreign exchange reserves to $8 billion by May 9, 2014 from $5.4 billion at end-March 2014.
This marked improvement in reserves and the consequent stability in the foreign exchange market is the main indicator of improved sentiments in and about the economy. In turn, these sentiments could help in attracting more financial inflows and thus lead to further increases in reserves.
The trade deficit remains at an elevated level of $12.2 billion during July-March, FY14 because of the gap between imports and exports, also the Real Effective Exchange Rate (REER) has appreciated by 8.0 percent in Q3-FY14 and its potential impact on the trade balance needs to be monitored carefully going forward.
As far as tax collection performance of the government is concerned, despite a shortfall in tax collection compared to the budgeted target, the government has been able to contain the fiscal deficit at 3.1 percent during July-March, FY14.
Govt borrowing from banking sector declines
Sunday May 18, 2014
KARACHI: The government reliance on banking sector for financing fiscal deficit showed a significant improvement as borrowing from State Bank of Pakistan (SBP) and scheduled banks stood at Rs 276 billion.
The SBP data revealed the government borrowing from Bank has come to zero after it made a retirement of Rs 287 billion, which was now being maintained as its reserves. On the other hand, the borrowing stood at Rs 1,021 billion during the corresponding period of last year.
Moreover, the government was also able to keep its borrowings from SBP below the International Monetary Fund (IMF)’s target for end-March 2014. In fact, the SBP was able to meet the IMF’s adjusted Net International Reserve (NIR) target for end-March 2014 by a wide margin, the SBP statement said at announcing of monetary policy.
Nevertheless, mainly due to robust growth in worker’s remittances, the external current account deficit at $2.3 billion seemed quite manageable at this point in time. This is because the capital and financial account net flows have also improved to $2.2 billion, considerably easing the pressure on the balance of payments position.
The better-than-projected inflows from the issuance of Euro bonds of $2 billion and other inflows from multilateral sources in April and early May 2014 have improved the SBP’s foreign exchange reserves to $8 billion by May 9, 2014 from $5.4 billion at end-March 2014.
This marked improvement in reserves and the consequent stability in the foreign exchange market is the main indicator of improved sentiments in and about the economy. In turn, these sentiments could help in attracting more financial inflows and thus lead to further increases in reserves.
The trade deficit remains at an elevated level of $12.2 billion during July-March, FY14 because of the gap between imports and exports, also the Real Effective Exchange Rate (REER) has appreciated by 8.0 percent in Q3-FY14 and its potential impact on the trade balance needs to be monitored carefully going forward.
As far as tax collection performance of the government is concerned, despite a shortfall in tax collection compared to the budgeted target, the government has been able to contain the fiscal deficit at 3.1 percent during July-March, FY14.
Govt borrowing from banking sector declines
