Due to excess liquidity in the banking system, the yield on the government treasury bills has fallen to a historic low of 2 per cent in the first week of March.

Falling rates has enabled the government to retire expensive central bank debts. During the period February 15-March 15 this year, the government retired Rs34 billion SBP debt.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended March 29, 2003, both notes in circulation and those issued declined further in the week under review. Notes in circulation stood at Rs516,645.505 million against earlier week’s figure of Rs524,669.831 million, showing a fall of Rs8,024.326 million. When compared to the corresponding week a year ago when it was Rs453,644.993 million, the current week’s figure is higher by Rs63,000.512 million.

Total notes issued also recorded a fall in the current week. At Rs516,866.821 million it was smaller by Rs7,968.629 million over the figure of Rs524,835.450 million recorded a week earlier. In the corresponding week last year it amounted to Rs453,844.371 million, which shows current week’s figure to be higher by Rs63,022.45 million over last year’s figure.

Approved foreign exchange declined in the week to Rs448,730.657 million, smaller by Rs17,453.72 million over preceding week’s figure of Rs466,184.377 million recorded a week earlier. When compared to the corresponding week a year ago, when the figure was Rs179,839.533 million, the current week’s figure was higher by Rs268,891.124 million.

Balances held outside Pakistan in approved foreign exchange showed a further increase in the week under review. It stood at Rs96,541.615 million over preceding week’s figure of Rs77,407.076 million, showing a rise of Rs19,134.539 million. Compared to last year’s corresponding figure of Rs56,589.026 million, the current week’s figure is higher by Rs39,952.589 million.

Loans and advances of scheduled banks to the three sectors — agricultural, industrial and export showed a mixed picture in the week under review. The agricultural sector received Rs54,028.074 million similar to preceding week’s figure. The current week’s figure is lower by Rs11.368 million over last year’s corresponding figure of Rs54,039.442 million.

There was an inflow of Rs2,966.943 million to the industrial sector during the week under review, depicting a decline of Rs9.606 million over previous week’s Rs2,976.549 million. When compared to last year’s corresponding figure of Rs3,600.045 million, the current week’s figure is lower by Rs633.102 million.

The export sector received Rs43,352.662 million against previous week’s figure of Rs43,181.957 million, showing a rise of Rs170.705 million. Current week’s figure was smaller by Rs13,681.315 million over last year’s corresponding figure of Rs57,033.977 million.

According to the weekly statement of position of scheduled banks for the week ended March 29, 2003, the sum of demand and time liabilities maintained the upward trend in the week under review. The sum total stood at Rs1,665,580 million against preceding week’s Rs1,661,935 million, showing a rise of Rs3,645 million. As compared to the total deposits of Rs1,392,629 million in the corresponding period last year, current week’s deposits were higher by Rs272,951 million.

During the week under review, both demand and time deposits increased. Demand deposits rose to Rs760,367 million, showing a rise of Rs3,261 million over previous week’s Rs757,106 million. It was also, higher against last year’s corresponding figure of Rs617,759 million by Rs142,608 million.

In the current week, time deposits were higher over preceding week and against the corresponding week last year. At Rs905,213 million, it was larger by Rs384 million over previous week’s Rs904,829 million, and by Rs130,343 million, over last year’s corresponding figure of Rs774,870 million.

Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities which had declined earlier, rose in the current week. At Rs128,437 million it was larger by Rs443 million over preceding week’s Rs127,994 million. Compared to last year’s corresponding figure of Rs128,230 million, the current week’s figure is higher by Rs207 million.

Scheduled banks borrowings from banks abroad stood at Rs14,742 million in the current week, as against Rs14,192 million a week ago, showing a rise of Rs550 million. It was smaller by Rs494 million over last year’s corresponding figure of Rs15,236 million.

Money at call and short notice in Pakistan increased in the week under review. It stood at Rs23,720 million, a rise of Rs1,296 million over preceding week’s Rs22,424 million. When compared to last year’s corresponding figure of Rs45,246 million, the current figure is lower by Rs21,526 million.

Scheduled banks advances, including bills purchased and discounted, increased in the week under review. At Rs996,956 million it was larger by Rs8,362 million over preceding week’s Rs988,594 million. Compared to the corresponding figure a year ago, when advances were to the tune of Rs962,422 million, the current week’s advances are higher by Rs34,534 million. Scheduled banks investment in central government securities, Treasury bills and other approved securities rose in the current week. Such investments amounted to Rs690,181 million, a rise of Rs6,400 million over previous week’s Rs683,781 million. Compared to last year’s corresponding figure of Rs399,657 million, the current week’s investment is higher by Rs290,524 million.