No fresh borrowings from SBP, clarifies finance ministry

ISLAMABAD: The Ministry of Finance here on Thursday clarified that there had been no fresh borrowings by the government from the State Bank of Pakistan (SBP).

“In fact the government has been retiring its previous stock of debt with the SBP on its maturity,” the ministry said in a statement while responding to news circulating on social media whereby an impression was being created that government had borrowed from the central bank.

The statement termed it grossly incorrect which depicted the limited understanding of the monetary variables.

It said, as reported in the monetary tables (M2), the government’s borrowing from the SBP for budgetary purposes was calculated as the difference between the government’s stock of borrowing from the SBP and its deposits with the central bank.

Therefore, net borrowing number may change due to fluctuation in cash balance with SBP and other accounting conventions, it said adding this change was not fresh budgetary borrowing by the government from SBP but just a change in government’s cash balance with the SBP.

The ministry said, the government remained committed to complying with its obligations under the amended SBP Act and IMF program conditions.