ISLAMABAD (APP): Apropos to the story titled “In breach of law, govt borrows Rs239bn from State Bank: think tank”, State Bank of Pakistan categorically rejects the content of the article.

It is also regrettable that prior to the filing of this story, the reporter did not bother to contact SBP for verification of the data, said a press release issued here.

SBP further reiterates that no breach of Section 9-C of the SBP Act of 1956 has taken place, as asserted by the reporter.

Apparently, the said story is based on a research report by an Islamabad-based economic think tank, Prime Institute (PI) which prima facie has relied on the data titled “Credit/ Loans Classified by Borrowers”, on the SBP website. However, this data appears to have been misconstrued by the think tank. Ironically, the reporter relied on an unpublished research report, while failing to corroborate its assertions.

It is clarified that data in the aforesaid table is calculated on accrual basis which takes into account accretion of interest over time and impact of exchange rate fluctuation in case of on-lending of Special Drawing Rights (SDR) Allocation, received by the Government of Pakistan as a member of the International Monetary Fund (IMF).

Furthermore, gross amount of lending is netted-off against the government deposits with the SBP. Based on these reporting principles, the increase of net SBP credit of Rs. 239 billion to the government sector is attributable to constituent elements namely; accrual of interest (Rs. 110 billion), impact of exchange rate revaluation (Rs. 84 billion) and decrease in government deposits with SBP (Rs. 45 billion). Needless to mention, SBP has not extended any fresh loan to the government since the promulgation of SBP Amendment Act, 2022.

It is further clarified that since the discontinuation of borrowing from the State Bank of Pakistan, the government has repaid SBP debt of Rs. 2,017 billion. It is hoped that in future, the newspaper would contact SBP prior to the publication of news related to the central bank and its subsidiary organizations.

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