Expense on new notes printing jumps by 25pc to Rs 5.69b

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Economic Updates - Pak Major Financial News

The central bank’s expenses on printing of new bank notes have jumped by 25 per cent to Rs5.69 billion in fiscal year 2012 against Rs4.58 billion in FY11, as the federal government higher borrowing forced it to print new notes on large scale.

Financial experts say that central bank, which is responsible for keeping inflation under control in the country, appears to have become victim of it, as the SBP’s administrative expenses have also increased by 25 per cent during the year. The data showed the State Bank’ total expenses rose to Rs20 billion for administrative and other expenses compared to Rs15 billion of the previous year.Financial statement reveals that total assets of the State Bank reached Rs3.785 trillion by end of June 30, 2012 as compared to Rs3.618 trillion as on June 30 2011, depicting an increase of Rs167 billion in a year.

Assets include Rs313 billion of gold reserves, Rs1.8 billion of local currency coins, Rs1.038 trillion of foreign currency reserves, Rs 91.334 billion of Special Drawing Rights of International Monetary Funds (IMF), Rs1.827 trillion of investment, Rs340 billion of loans, advances, bill of exchange and commercial papers and Rs23.45 billion of property and equipment. Interest is the main component of the SBP’s income and higher profitability means the government is getting massive financing from the State Bank to meet its fiscal deficit. Accordingly, the government is also paying huge interest on this financing, resulting in higher profit for the SBP, they added. According to accounts the State Bank’s interest income rose by 9.5 percent to Rs236.27 billion in FY12 compared to Rs215.74 billion in FY11.

During the period under review, interest payments by SBP fell to Rs11.33 billion, down by 15 percent, from Rs13.39 billion. Commission income of SBP stood at about the same level of Rs1.95 billion during last fiscal year. The SBP’s total liabilities stood at Rs3.273 trillion at end of FY12, up by Rs127 billion, from Rs3.146 trillion in FY11. During the period under review, net assets of the SBP also rose to Rs511 billion from Rs472 billion. Liabilities include Rs1.776 trillion of bank notes in circulation, Rs396 billion of deposits of banks and financial institutions, Rs656 billion payable to IMF and Rs 153 billion of other deposits.According to the consolidated profit and loss accounts, the State Bank’s profit, which stood on the downward side for last two years, is now moving up. It witnessed a massive increase of Rs80 billion to Rs260.8 billion in FY12. In FY11, the SBP’s profit stood at Rs181 billion, down by 3.1 percent from Rs187 billion profit of FY10. Analysts said the interest on domestic debt is the main source of income for the State Bank and the continued higher borrowing by the federal government has led to rise in the central bank’s revenue in FY12. Exchange gain income is another segment, which has posted a pronominal surge during the last fiscal year. With an increase of 2130 per cent or Rs40.9 billion, exchange gain income has reached Rs42.82 billion in FY12 from Rs1.92 billion in FY11.

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