Fact Check: Did the PDM-led Government Borrow Rs. 200bn from the State Bank?
Muzzammil Aslam (@MuzzammilAslam3) is the PTI spokesperson on the economy and finance. On April 28, 2022, one of his tweets read:
“Current [PDM-led] govt breached IMF promised and borrowed [PKR] 200 billion from SBP.”
Enclosed with the tweet was an image of the monetary aggregate (M2) data sourced from the State Bank’s official website.
To add some background, the IMF has imposed several harsh conditions on Pakistan for the former to aid the latter financially. One of these conditions is the restrictive borrowing from the State Bank till September 2022. Therefore, the State Bank recently injected Rs. 03 trillion into the money market so that the Government can borrow from commercial banks.
Hence, according to Aslam, the Government breached the promise of the IMF.
However, a closer look into the data cited by Aslam reveals that the PKR 200 billion (PKR 203.556 billion) figure corresponds to the borrowing done from July 01, 2021 (the beginning of FY22) to April 15, 2022.
The Ministry of Finance rejected Aslam’s dubious claim and asserted that no fresh borrowing from the State Bank occurred.
Conclusion
Even if one does not have faith in the Ministry of Finance’s response, one can conclude that Aslam’s claim holds no validity by analyzing the broad money (M2) data. The 200 billion figure responds to the total borrowing done from the beginning of FY22 to mid-April 2022 and does not suggest a ‘fresh’ borrowing of PKR 200 billion from the State Bank.
Originally published at https://rafeyirahman.substack.com on April 29, 2022. If you liked this or learned something new, please consider subscribing to Finesse for more financial literacy posts.
