Review of monetary and credit developments.

Byline: S. Kamal Hayder Kazmi

The Analysis of Economic survey of Pakistan FY2020 showed that broad money enlarged by Rs 1,481.3 billion during 01 Jul- 24 Apr, FY2020 against with Rs 540.6 billion previous year. This higher money growth was because of to a sharp expansion in the NFA of the banking system, mainly of the State Bank of Pakistan (SBP). Net Foreign Assets (NFA) point contribution has grown to 5 percent during the period under review against with the negative growth of 5.6 percent in the corresponding period last year.

NDA point contribution reached at 3.3 percent reflecting government spending to fight against the Covid-19 spread and provide relief to the population. Thus, overall money supply increased by 8.3 percent during the period under review. The Analysis also showed that reserve money grew by 8.4 percent (Rs 549.1 billion) during 01 Jul-24 Apr, FY2020 as against to 8.9 percent (Rs 488 billion) during the comparable period previous year. The rise in reserve money has been observed on account of a substantial rise in SBP's NFA. The NFA of SBP rose by Rs 902.7 billion during 01 Jul- 24 Apr, FY2020 against a sharp contraction of Rs 743.8 billion in the corresponding period last year.

Monetary Indicators (Rs Billion)

Details###24-Apr-20

##FY2019 (Stocks) (R)###26-Apr-19

Net Foreign Assets(NFA)###-1,507.10###893.7###-890.4

Net Domestic Assets(NDA)###19,305.60###587.6###1,431.00

Net Government Borrowing###12,336.70###911.7###825.9

Borrowing for budgetary support###11,596.50###1,023.90###990.9

From SBP###6,691.90###-736.5###3,204.70

From Scheduled banks###4,904.60###1,760.40###-2,213.90

Credit to Private Sector (R)###6,666.50###304.7###581

Credit to PSEs###1,394.20###-10.6###312.1

Broad Money###17,798.50###1,481.30###540.6

Reserve Money###6,573.40###549.1###488

Growth in M2 (%)###11.3###8.3###3.4

Reserve Money Growth (%)###19.9###8.4###8.9

On the other hand, NDA of SBP fell by Rs 353.7 billion as against the rise of Rs 1,231.8 billion during the same period last year as the government of Pakistan has discontinued its borrowing from SBP. Within broad money, the NFA of the banking sector enlarged through Rs 893.7 billion during 01 July-24 Apr, FY2020 against the contraction of Rs 890.4 billion in the corresponding period previous year. The rise in NFA reflects the improvement in Pakistan's external account. While the expansion in net domestic assets remained moderate and reached at Rs 587. 6 billion as against the expansion of Rs...