![govt borrows rs136b in 44 days govt borrows rs136b in 44 days](https://tribune.com.pk/application/../wp-content/uploads/2010/08/State-bank-New111111.jpg)
Data released by the central bank showed that the government’s borrowing by mid-August rose more than ten-fold from Rs10.686 billion in the same period last year.
Conversely, provincial governments ended up paying back outstanding credit and loans from the State Bank on a net basis.
Balochistan returned Rs778 million by August 13. Sindh government repaid Rs2.157 billion while Khyber-Pakhtunkhwa returned Rs10.810 billion. Punjab government has been the only net borrower during this period, piling on Rs11.322 billion in debt from the central bank.
The non-government sector also reduced its borrowing from the central bank by Rs65.804 billion, lower than last year’s tally of Rs80.091 billion.
Broad money supply dropped by 1.97 per cent to Rs113.982 billion during this period.
Analysts commented that the reduction in borrowings from the central bank is encouraging, however they highlighted that recent floods have once again left the government with little choice beyond borrowing from the State Bank to kick-start rescue and reconstruction efforts.
They also highlighted that the federal government’s borrowing from scheduled banks declined during the same period by Rs36.783 billion.
Experts asserted that by continuing borrowing from the State Bank, the federal government is sidelining the private sector.
“Borrowing from the central bank is inflationary in nature,” commented economist A B Shahid. “Government must work to inculcate repayment capacity in its projects,” he added.
He warned that if the government continues on its path of borrowing from the central bank, successively greater portions of the budget will have to be allocated for loan repayment.
Published in The Express Tribune, August 25th, 2010.
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