Finance Division denies allegation of borrowing from SBP

The Finance Division has denied the allegation that it has borrowed from the State Bank of Pakistan (SBP), countering that the accusers have limited knowledge of monetary variables.

In a press statement it said, a news is circulating on social media whereby an impression is being created that Government has borrowed from State Bank of Pakistan (SBP) which is grossly incorrect and depicts the limited understanding of the monetary variables.

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

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

Moreover, the Finance Division of the Government of Pakistan remains committed to complying with its obligations under the amended SBP Act and International Monetary Fund (IMF) program conditions.

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There has been no fresh borrowings by the government from the SBP. In fact the government has been retiring its previous stock of debt with the SBP on its maturity.

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