ISLAMABAD – Finance Minister Dr Abdul Hafeez Sheikh has told the Senate that Rs 153.750 billion in currency notes were printed during the fiscal year (FY) 2009-10 resulting in reduction of financial intermediation.
The minister informed this in a written reply during the question hour. He added that the issuing of currency notes also resulted in increased currency in circulation, adding that the currency in circulation has increased by Rs 263 billion during 2011, showing a year-on-year growth of 19 percent as on February 15, 2011.
He informed that the currency to deposit ratio has increased to 33 percent as on February 2011 from 29 percent at the end of June 2010. The prime reason for this increase in currency in circulation is heavy government borrowings from State Bank of Pakistan for budgetary support.
The government borrowings from SBP essentially means of new money besides being inflationary, he added. The minister noted that an understanding between SBP and the government to restrict such borrowings at the end-September level of Rs 1,290 billion will help in restraining the printing of new notes and to reduce currency in circulation.
Rs 153.75bn printed during FY09-10
