KARACHI, May 23: The borrowing for budgetary support finally crossed the Rs1 trillion-mark, while the government suddenly increased its borrowing from State Bank speeding fast towards half a trillion rupees.

The State Bank reported on Thursday that the borrowing for budgetary support rose to Rs1.042tr during ten months and 10 days of the current fiscal. However, this is still less than the borrowing of Rs1.076tr made last year during the same period.

The expected fiscal gap of about 4 per cent of GDP in the budget could not be controlled to its limit which might be around 8pc at the end of the current fiscal. This large fiscal gap demands large size of borrowings like previous year when the fiscal gap was over 8pc.

Surprisingly, most of the important figures regarding the government borrowing are almost same of the previous fiscal.

The size of the budgetary borrowing is almost same with fractional difference. The borrowing from State Bank rose to Rs454bn; it was Rs424bn during the same period last year.

The growth rate of monetary expansion for this period was 9.86pc while the growth rate was 9.06pc last year.

Even the government borrowing from the banking system was almost identical. The government has so far borrowed Rs631bn from commercial banks; the amount was Rs624bn last year.

The biggest difference was noted in the credit off take by the private sector which shrunk to record low this year in the 10 months.

The private sector credit off take during this period was just Rs92bn compared to Rs235bn last year. Even the last year was not significant for economic growth and participation of private sector. The poor amount of credit off take by the private sector reflects that the economic growth could be even lower than last year.

The current fiscal could prove the worst year for the economic growth in the last five years. While the high hopes are attached with the new incoming government, it would not reflect in the current fiscal that is to be ended on June 30.

During the last two months the economic managers of the country tried to reduce the borrowing from the banking system and the State Bank apparently discouraged banks not to rush for treasury bills. The SBP reduced return on t-bills substantially during a year.

However, bankers said the government needs more money and banks are eager to invest in government papers. They said the revenue generation is much less than the requirement and even lower than the target set for this fiscal.

“New taxes have been planned to improve revenue but it would have impact in next fiscal year. This year more borrowing from banking system is required,” said a senior banker.