Govt Denies Allegation of Borrowing from State Bank

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 [sic]. 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.”

It further explained that the net borrowing number may change due to fluctuations in the cash balance with the SBP and other accounting conventions.

This change is not fresh budgetary borrowing by the government from the SBP but is only a change in the government’s cash balance with the SBP.

The Finance Division affirmed that the government is committed to complying with its obligations under the amended SBP Act and the conditions of the IMF program. Additionally, there have been no fresh borrowings by the government from the SBP, and it has, in fact, been retiring its previous stock of debt with the SBP on its maturity.