The State Bank of Pakistan (SBP) on Friday injected Rs 1,245.75 billion through open market operation (OMO) into the banking system.
The SBP said the increased liquidity injections were to ensure that interbank overnight repo rate remained close to the policy rate.
The central bank injected the amount for 10-day tenor against offered amount of Rs 1,267.75 billion at the rate of return of 6.06 per cent per annum. The latest OMO was second of this week. The central bank injected Rs 100 billion a day earlier. The volume of OMOs peaked at Rs 1,345.75 billion during this week.
However, the expansionary impact of these injections was largely offset by the net retirement in government borrowing from the SBP. The federal and provincial governments retired Rs 410.6 billion during July 01, 2015, to January 15, 2016. This shows containment in budgetary borrowing from the SBP.
However, budgetary financing needs met through commercial banks. Despite focus on commercial banks, the net borrowing was still lower than the previous year. So far the net borrowing from the system was at Rs 659 billion for the period July 01, 2015, to January 15, 2016, as against Rs 697 billion in the corresponding period of last year. “This containment in government borrowing reflects an improvement in fiscal accounts,” the SBP said in a report.