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. 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. Therefore, net borrowing number may change due to fluctuation in cash balance with SBP and other accounting conventions. This change is not fresh budgetary borrowing by the government from SBP but just a change in government’s cash balance with the SBP. Government remains committed to complying with its obligations under the amended SBP Act and IMF program conditions. There has been no fresh borrowings by the government from the SBP. In fact the government has been retiring its previous stock of debt with the SBP on its maturity.
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