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Summary The ratio of money in circulation has increased to 14.5 per cent, up 5 per cent from last year.
The State Bank of Pakistan said the surge is caused by an increase in state borrowing. The government has borrowed Rs 6.26 billion between June 4 and June 11. Sixty-eight percent of these loans came from commercial banks while 32 percent from the Central bank (SBP). The new loans take state borrowing from banks has topped Rs 735 billion.State borrowing is not only spurring inflation, but also hampering borrowing by the private sector. By the end of June, the private sector repaid loans worth Rs 11 billion. During this period, bank deposits increased to Rs 5.55 billion, up 4.5 percent.
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