KARACHI, Oct 7: Government’s borrowing for its budgetary support from the banking system has crossed 40 per cent of the whole year’s target in just two months. According to the data available on the State Bank’s website, the government borrowed Rs39.98 billion from the banking system for its budgetary support from July 1 to August 27, 2005. The borrowing is 12 per cent higher than last year in the same period. The full year’s borrowing target for budgetary support is Rs98 billion.

The government borrowed Rs35.648 billion from the State Bank, while it raised Rs4.27 billion from scheduled banks. Last year, instead of borrowing, the government retired Rs5.27 billion of the scheduled banks.

The borrowing of the provincial governments has also increased significantly during the same period. The data show that the provincial governments borrowed Rs23.184 billion as compared to Rs16.582 billion last year, which is 39.8 per cent higher. The State Bank was the main lender to the provincial governments as it extended a loan of Rs20 billion out of the total Rs23.184 billion.

Net budgetary borrowing from the banking system reached Rs63.103 billion during the period under review, reflecting a high borrowing trend of the governments.

Economists believe that if the current trend of borrowing continues it will be difficult for the government to keep budget deficit under control. The government is committed to keeping the budget deficit around four per cent of GDP.