KARACHI: Monetary expansion of Pakistan in the first half of 2017-18 was 1.35 per cent, less than half of 2.78 per cent growth in broad money recorded a year ago, according to the State Bank of Pakistan (SBP).

This indicates a limited flow of liquidity in the economy in July-December compared to the similar period in the preceding fiscal year.

Broad money showed a growth of Rs196.6 billion between July 1 and Dec 22 as opposed to Rs356.7 billion in the same period a year ago.

The federal government borrowed Rs463 billion from the central bank compared to Rs1.02 trillion in the preceding year. This indicates a change in the pattern of borrowing.

The government borrowed Rs117.7 billion from scheduled banks against the retirement of Rs514 billion a year ago. Surprisingly, all provinces have been retiring debt, which is in contrast to 2016-17.

The provinces collectively retired debts worth Rs170 billion against Rs27 billion in the same period of the last fiscal year. However, Khyber Pakhtunkhwa and Punjab had borrowed Rs15 billion each from the SBP during the first half of the previous fiscal year.

The debt retirement by all federating units this year shows that economic activities in the provinces were slow as they did not need liquidity. Credit off-take by the private sector increased to Rs138 billion from Rs123 billion a year ago. But the improvement was entirely due to conventional banks’ unusual performance.

Internews