Monetary Growth Slows In FY-07/08

Thursday, September 11, 2008 at 4:14 pm

KARACHI:Country’s main monetary aggregate grew by 15.35 percent in the fiscal year ending on June 30, compared with 19.32 percent growth in the previous year, and there was a small contraction in the first few weeks of July, central bank data showed.

The M2 monetary aggregate contracted by 2.87 percent from the beginning of the financial year on July 1 to July 26, the State Bank of Pakistan said.

That compared with a contraction of 1.84 percent between July 1 and July 28 last year, according to SBP data released late on Wednesday.

According to analysts, a contraction in the broad money supply in July is a seasonal trend and money supply is likely to expand after August.

Broad money (M2) is currency in circulation, plus other deposits with the central bank and total demand and time deposits, including resident’s foreign currency deposits. The government borrowed a total of 58.24 billion rupees ($761 million) from July 1 to July 26, out of which 30.07 billion rupees ($393 million) was from the SBP and 28.17 billion rupees ($368 million) from other banks, according to the data.

In the July 1 to July 28 period last year, the government had borrowed a total of 45.39 billion from other banks and it paid 4.07 billion rupees back to the SBP.

The government has made a commitment to cut quarterly net borrowing from the central bank to zero, in order to help control inflation running at close to 25 percent.

Monetary Growth Slows In FY-07/08

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