Pakistan Review News and Reviews

OMO facilitates central bank to mop up Rs13 billion

The State Bank of Pakistan has slashed the discount rate by 1.5 per cent, reducing it from 9 per cent to 7.5 per cent per annum. The discount rate was as high as 14 per cent in July 2001, and this is the fifth cut since then.

With the lowering of the discount rate, the minimum rate of return to be paid by recipients of financing facilities from the State Bank for meeting temporary liquidity shortages and SBP 3- day Repo facility has been reduced from 9 per cent to 7.5 per cent.

On November 19, the State Bank sucked in Rs13 billion through one week repo at an open market operation at 2.95 per cent. This was the first OMO after the cut in discount rate. The OMO had attracted bids worth Rs27.35 billion.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended November 9, 2002, both notes in circulation and those issued maintained the rise in the week under review. Notes in circulation stood at Rs505,739.539 million against earlier week's figure of Rs480,490.810 million, showing a rise of Rs25,248.729 million. When compared to the corresponding week a year ago when it was Rs440,321.367 million, the current week's figure is higher by Rs65,418.172 million.

Total notes issued also recorded a rise in the current week. At Rs505,930.814 million it was larger by Rs25,289.0 million over the figure of Rs480,641.814 million recorded a week earlier. In the corresponding week last year it amounted to Rs440,498.308 million, which shows current week's figure to be higher by Rs65,432.506 million over last year's figure.

Approved foreign exchange stood at Rs355,853.511 million, smaller by Rs821.417 million over preceding week's figure of Rs356,674.928 million recorded a week earlier. When compared to the corresponding week a year ago, when the figure was Rs133,031.932 million, the current week's figure was higher by Rs222,821.579 million.

Balances held outside Pakistan in approved foreign exchange increased in the week under review. It stood at Rs49,469.481 million over preceding week's figure of Rs43,647.696 million, showing a rise of Rs5,821.785 million. Compared to last year's corresponding figure of Rs16,815.193 million, the current week's figure is larger by Rs32,654.288 million.

Loans and advances of scheduled banks to the three sectors - agricultural, industrial and export show a mixed picture in the week under review. The agricultural sector received Rs53,905.026 million. The current week's figure is smaller by Rs386.764 million over last year's corresponding figure of Rs54,291.790 million.

There was an inflow of Rs3,257.725 million to the industrial sector during the week under review, depicting a decline of Rs1.946 million over previous week's Rs3,259.671 million. When compared to last year's corresponding figure of Rs3,942.231 million, the current week's figure is lower by Rs684.506 million.

The export sector received Rs50,478.198 million over previous week's figure of Rs49,703.766 million, showing a rise of Rs774.432 million. Current week's figure was lower by Rs3,497.579 million over last year's corresponding figure of Rs53,975.777 million.

According to the weekly Statement of Position of scheduled banks for the week ended November 8, 2002, the sum of demand and time liabilities declined further in the week under review. The sum stood at Rs1,534,303 million, showing a fall of Rs3,639 million over preceding week's figure of Rs1,530,664 million. As compared to the total deposits of Rs1,303,988 million in the corresponding period last year, the current week's deposits were higher by Rs226,676 million.

During the week under review, demand deposits maintained the upward trend and increased by Rs29,452 million to Rs709,351 million, over previous week's figure of Rs679,899 million, and was also higher against last year's corresponding figure of Rs572,066 million by Rs137,285 million.

In the week, time liabilities also declined. It fell by Rs33,091 million to Rs821,313 million against preceding week's Rs854,404 million. Compared to last year's corresponding figure of Rs731,922 million, the current week's figure is higher by Rs89,391 million.

Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities increased in the current week. At Rs137,976 million it was larger by Rs781 million over preceding week's Rs137,195 million. Compared to last year's corresponding figure of Rs124,772 million, the current week's figure is higher by Rs13,204 million.

Scheduled banks borrowings from banks abroad stood at Rs16,357 million in the current week, as against Rs15,308 million a week ago, showing a rise of Rs1,049 million. It was lower by Rs1,727 million over last year's corresponding figure of Rs14,630 million. Money at call and short notice in Pakistan rose in the week under review. It stood at Rs43,692 million, showing a rise of Rs1,172 million over preceding week's Rs42,520 million. When compared to last year's corresponding figure of Rs49,169 million, the current week's figure was lower by Rs5,477 million.

Scheduled banks advances including bills purchased and discounted, maintained the rise in the week under review. At Rs960,138 million it was larger by Rs5,629 million over preceding week's figure of Rs954,509 million. Compared to the corresponding figure a year ago, when advances were to the tune of Rs943,191 million, the current week's advances are higher by Rs16,947 million.

Dawn