The State Bank of Pakistan has tightened its monetary policy by raising the discount rate by 200bps to 15 per cent. The increase was necessitated to bring corrections in the macroeconomic imbalances of the economy, says the SBP.

According to the Statement of Affairs of the State Bank of Pakistan for the week ended November 1, 2008, both notes in circulation and those issued decreased. Notes in circulation stood at Rs1,173.427bn against earlier week’s figure of Rs1,185.624bn, a fall of Rs12.197bn. When compared to the corresponding week a year ago when it was Rs974.361bn, the current week’s figure is higher by Rs199.066bn.

Total notes issued also declined at Rs1,173.633bn in the week under review from Rs1,185.735bn recorded a week earlier. When compared to corresponding week last year it showed a rise of Rs199.139bn.

Approved foreign exchange increased in the week to Rs183.286bn or by Rs6.427bn over preceding week’s Rs176.859bn. When compared to the corresponding week a year ago, when the figure was Rs760.997bn, the current week’s figure is lower by Rs577.711bn.

Balances held outside Pakistan in approved foreign exchange decreased in the week under review. It stood at Rs147.555bn over preceding week’s figure of Rs170.628bn, a fall of Rs23.073bn. Compared to last year’s corresponding figure of Rs133.095bn, the current week’s figure is larger by Rs14.46bn.

Loans and advances of scheduled banks to the three sectors – agricultural, industrial and export – showed a mixed trend in the week under review. The agricultural sector received Rs57.777bn, against preceding week’s figure of Rs57,778bn, a fall of Rs0.001bn. The current week’s figure is smaller by Rs42.608bn over last year’s corresponding figure of Rs100.385bn.

There was an inflow of Rs36.371bn to the industrial sector during the week under review, a fall of Rs0.035bn against preceding week’s figure of Rs36.406bn. When compared to last year’s corresponding figure of Rs39.765bn, the current week’s figure is smaller by Rs3.394bn.

The export sector received Rs104.365bn against previous week’s figure of Rs103.092bn, larger by Rs1.273bn. Current week’s figure was smaller by Rs3.98bn over last year’s corresponding figure of Rs100.385bn.

According to the weekly statement of position of all scheduled banks for the week ended November 8, 2008, deposits and other accounts of the scheduled banks declined in the current week and stood at Rs3,690.969bn, smaller by Rs13.732bn over preceding week’s figure of Rs3,704.701bn. Compared with last year’s corresponding figure of Rs3,484.574bn, the current week’s figure is larger by Rs206.395bn. During the current week commercial banks deposits showed a decrease of Rs13.718bn over the week to Rs3,679.703bn, against preceding week’s Rs3,693.421bn. Specialized banks deposits stood at Rs11.266bn, against preceding week’s Rs11.280bn, a fall of Rs0.014bn.

Borrowings by all scheduled banks declined in the week. It fell to Rs414.169bn over preceding week’s figure of Rs429.736bn, a fall of Rs15.567bn. Compared to last year’s corresponding figure of Rs426.456bn, current week’s figure is lower by Rs12.287bn. Current week’s decrease was due to a fall in the borrowings by commercial banks, which fell to Rs333.135bn against previous week’s Rs348.683bn, or by Rs15.548bn. Borrowings by specialized banks stood at Rs81.034bn, against preceding week’s figure of Rs81.053bn, lower by Rs0.019bn.

Gross advances stood at Rs3,107.744bn in the week under review, a fall of Rs4.869bn over preceding week’s figure of Rs3,112.613bn. Compared to last year’s corresponding figure of Rs2,507.054bn, current week’s figure is larger by Rs600.69bn. In the week under review, advances by commercial banks fell to Rs3,008.157bn against earlier week’s figure of Rs3,012.381bn, or by Rs4.224bn. Advances of specialized banks stood at Rs99.587bn, smaller by Rs0.644bn over earlier week’s figure of Rs100.231bn.

Investments of all scheduled banks decreased in the week by Rs54.788bn to Rs868.299bn against preceding week’s figure of Rs923.087bn. Compared to last year’s corresponding figure of Rs1,248.989bn, current week’s figure is smaller by Rs380.69bn. In the current week, commercial banks investment declined to Rs857.097bn, from earlier week’s Rs911.907bn, or by Rs54.81bn. Specialized banks investment stood at Rs11.202bn, against preceding week’s Rs11.179bn, higher by Rs0.023bn.

Cash and balances with treasury banks of all scheduled banks fell by Rs29.148bn during the week to stand at Rs323.313bn against earlier week’s Rs352.461bn. Current week’s figure was smaller by Rs20.456bn compared to last year’s corresponding figure of Rs343.769bn. In the current week, the figure for commercial banks stood at Rs320.577bn against preceding week’s figure of Rs349.916bn, a fall of Rs29.339bn, while of specialized banks it stood at Rs2.736bn over previous week’s Rs2.545bn.