State Bank of Profit?
Pakistan has included PKR 1.1 trillion profit for the State Bank in its non-tax revenue, a 200% upsurge since last year.
The new budget has been widely called a numbers game.
The Finance Minister unveiled the Budget for FY 2024 a week ago, forecasting optimistic numbers for the future. Unfortunately, various international organizations including Moody’s and the IMF have objected to the projections based on faulty assumptions. The inflated revenue categories have faced criticism as Pakistan anticipates a 38% rise in gross revenue, primarily attributed to an expansion in non-tax revenue (NTR). How closely does the reality align with this projection?
Pakistan expects to receive more than PKR 1 trillion from the State Bank in the upcoming year. This profit will be driven by interest earnings from loans to commercial banks, and other commercial operations conducted by the SBP. But who will borrow this money at a high-interest rate touching 21%? You guessed it… the Government. Due to its participation in the IMF program, the government is unable to borrow directly from the State Bank of Pakistan (SBP) and, therefore, relies on domestic banks for its borrowing needs.
In short, the State Bank is likely to lend money to domestic commercial banks at a rate lower than the policy rate. These banks will then finance the government’s various expenditures, charging the government a higher interest rate. While this bypass may be intriguing, is it aligned with our long-term objectives?
The new budget has been widely called a numbers game, lacking substance beyond its function as a ‘populist budget’ and an appeal to the IMF.
FROM MACRO PAKISTANI INSTAGRAM ACCOUNT
Team @brandnib making new visualizations for Macro Pakistani followers, readers, and collaborators since November 2020.
GRAPHICS
Data Visualization & Marketing Partner: Brand Nib
Visit: https://macropakistani.com/advertise/
Improve brand awareness for your startup/business or amplify the reach of your ongoing marketing campaigns by promoting them on Macro Pakistani. We are doing/have done successful paid collaborations with:
Send an email to hello@macropakistani.com
About Us: Macro Pakistani is a data-driven research platform that aims to provide a basic understanding of Pakistan’s economy. If you have an interest in contemporary news but are currently overburdened with sensationalism and specialized vocabulary, we are the platform for you.
How are we doing? Please send us any questions, comments or suggestions by replying to this email.