ISLAMABAD: The Planning Commission has underlined the need to limit government borrowings, from scheduled banks expressing, fear that the tendency of borrowing by the government would crowd out the private sector, it is learnt.
Sources said that money, prices and fiscal policy section of the Planning Commission pointed out that shift towards scheduled banks would crowd out the private sector. That has to be controlled by limiting government borrowing.The Planning Commission in monetary development during the first quarter of the current fiscal year stated that Net Domestic Assets (NDA) showed expansion of Rs 176.7 billion during the period in government sector borrowing (net), while borrowing for budgetary support stood at Rs181.5 billion.
Moreover, government borrowing from scheduled banks showed expansion of Rs 260.5 billion during the period under review against a contraction of Rs 1.4 billion in the corresponding period of previous year. Government borrowing from SBP also showed a contraction of Rs 79 billion, against an expansion of Rs 149 billion in the corresponding period of last year.
The Planning Commission said that the consecutive reduction in policy rate by State Bank of Pakistan (SBP) is a positive sign for public domestic debt, private sector and capital market. The reduction of interest rate would have a positive impact on economic growth as it is believed to improve the overall investment climate within the country.
The Net Foreign Assets (NFA) of the banking system contracted by Rs 89.3 billion reflecting a decrease of 11.4 percent during the first quarter of the current fiscal year against the expansion of Rs 35.1 billion showing a expansion of 6.5 percent during the corresponding period of previous year. The contraction in NFA is due to deficit in current account balance, Rs 105 billion ($ -1.2 billion), and deficit in trade balance was Rs 350 billion ($ 4.0 billion) in the period under review.
However, workers’ remittances reached $3.3 billion (Rs 288.7 billion) during July-Sept. 2011 against $2.6 billion (Rs 224.4 billion). Moreover, exports stood at $6.1 billion (Rs 533.6 billion) during July- Sept.2011 against $5.2 billion (Rs 448.8 billion) showing a growth of 18.8 percent over the corresponding period of previous year.
The imports stood at $10.2 billion (Rs 8892.3 billion) in July- Sept. 2011 against 8.2 billion (Rs 707.8 billion), posting a growth of 26.06percent over corresponding period of last year. Moreover, Portfolio investment and Equity securities also showed contraction of $ 46 million (Rs 4.0 billion) and $ 45 million (Rs 4.0 billion) respectively in July-Sept. 2011. – Brecorder