April 24, 2006	Monday	Rabi-ul-Awwal 25, 1427

Banks are faced with a liquidity crunch and on April 18, the State Bank of Pakistan injected Rs35 billion. The outflow of liquidity was due to high export financing by the banks and that it is expected to remain high because of higher growth in exports.

But despite huge injection of liquidity, money rates remained at the highest side showing the dept of scarcity. The Central Bank injected Rs35.350 billion into the market for four days at a rate of 8.7 per cent and the banks borrowed additional Rs4.2 billion at the rate of nine per cent.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended April 8, 2006, both notes in circulation and those issued increased during the week. Notes in circulation stood at Rs799,551.565 million against earlier week’s figure of Rs783,538.235 million, a rise of Rs16,013.330 million. When compared to the corresponding week a year ago when it was Rs716,834.246 million, the current week’s figure is higher by Rs82,717.319 million.

Total notes issued also increased in the current week over preceding week’s level. At Rs799,683.681 million it was larger by Rs15,994.584 million over the figure of Rs783,689.097 million recorded a week earlier. In the corresponding week last year it amounted to Rs716,998.899 million, which shows current week’s figure to be higher by Rs82,684.782 million over last year’s corresponding figure.

Approved foreign exchange increased in the week to Rs494,834.860 million or by Rs38,007.895 million over preceding week’s figure of Rs456,826.965 million.

When compared to the corresponding week a year ago, when the figure was Rs491,237.357 million, the current week’s figure is larger by Rs3,597.503 million.

Balances held outside Pakistan in approved foreign exchange decreased in the week under review. It stood at Rs140,581.064 million over preceding week’s figure of Rs184,797.870 million, showing a fall of Rs44,216.806 million. Compared to last year’s corresponding figure of Rs142,151.711 million, the current week’s figure lower is by Rs1,570.647 million.

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 Rs61,650.923 million, similar to preceding week’s figure. The current week’s figure is larger by Rs2,641.486 million over last year’s corresponding figure of Rs59,009.437 million.

There was an inflow of Rs5,470.775 million to the industrial sector during the week under review, a rise of Rs38.696 million against preceding week’s figure of Rs5,432.079 million. When compared to last year’s corresponding figure of Rs1,258.034 million, the current week’s figure is higher by Rs4,212.741 million.

The export sector received Rs108,033.719 million against previous week’s figure of Rs106,787.830 million, a rise of Rs1,245.889 million. Current week’s figure was smaller by Rs383.975 million over last year’s corresponding figure of Rs108,417.694 million.

According to the weekly statement of position of all scheduled banks for the week ended April 08, 2006, deposits and other accounts of the scheduled banks stood at Rs2,691.627 billion, having risen by Rs26.671 billion over preceding week’s figure of Rs2,664.956 billon. Commercial banks deposits showed a rise of Rs26.883 billion over the week to Rs2,679.971 billion against preceding week’s Rs2,653.088 billion, while of specialized banks it fell by Rs0.213 billion to Rs11.655 billion, over previous week’s Rs11.868 billion.

Borrowings by all scheduled banks increased during the week over preceding week’s figure. It rose to Rs353.947 billion over preceding week’s figure of Rs344.477 billion, a rise of Rs9.47 billion. This was primarily due to a increase in the borrowings by commercial banks, which rose to Rs270.469 billion against previous week’s Rs260.998 billion, or by Rs9.471 billion, while borrowings by specialised banks stood at Rs83.479 billion.

Gross advances stood at Rs2,071.763 billion in the week under review, a fall of Rs6.689 billion over preceding week’s figure of Rs2,078.452 billion. Advances by commercial banks fell to Rs1,965.965 billion against earlier week’s figure of Rs1,973.041 billion, smaller by Rs7.076 billion.

Investments of all scheduled banks rose in the week by Rs2.914 billion to Rs816.464 billion against preceding week’s figure of Rs813.550 billion. Commercial banks investment level rose to Rs797.824 billion, from earlier week’s Rs796.430 billion, higher by Rs1.394 billion, while of specialized banks it stood at Rs18.640 billion against previous week’s Rs17.120 billion, a rise of Rs1.52 billion.