Growth in reserve, broad money decelerate

The growth in both reserve money and broad money decelerated during the first four months of 2013, Finance Ministry data reveal. The year-on-year growth in the reserve money was 11.4 percent in April 2013. The broad money (M2b) grew by a moderate rate of 15.2 percent in April 2013 on a year on year basis, continuing the overall monetary expansion at the levels expected in the Monetary Programme for 2013.

During the first four months of the year, the public sector absorbed a greater proportion of domestic credit within the overall monetary expansion as against the credit extended to the private sector by commercial Banks.

The private sector credit growth, which was accelerated by a higher rate of 34.5 percent in 2011 and moderated to 17.6 percent in 2012 reflecting the deceleration in domestic economic activity, high market interest rates and depreciation of the rupee thereby resulting in a drop in imports, decelerated further to 10.2 percent in April 2013 on a year on year basis.

There would be a compositional change in the credit by commercial banks in the remainder of the year with the expected easing in public sector borrowing during the remaining period of the year and the adjustment of market lending rates.

Meanwhile, stock market activities reflected a gradual recovery during the first four months of 2013 following the sentiments gathered from Budget proposals to promote debt/equity market. All Share Price Index (ASPI) increased by 10 percent to 5,953 by end April 2013 in comparison to end April 2012.

The annual turnover declined by 18 percent to Rs. 74 billion by end April 2013 in comparison to the 59 percent decline recorded during the corresponding period in 2012. Market capitalization increased by 13 percent to Rs. 2,281 billion in comparison to the 19 percent decline recorded during the corresponding period in 2012.

Foreign purchases increased by 11 percent against the background of increase in foreign sales by 137 percent during this period due to profit taking and global volatilities.