KARACHI - The private sector credit off-take from the schedule banks has substantially fell by 26 percent during Jul-Dec FY09 amid tight liquidity approach of the banks slowdown in business, hike in lending rates and frequent demand stresses. In rupees the private sector credit has declined by 51.8 billion rupees from July to December 2008. The domestic banks have provided Rs 147 billion to the private sector from July 1 to December 20, 2008 as against their lending of Rs 199 billion during the same period of last fiscal. It may be mentioned here that the slowdown in the credit expansion to the corporate/business sector was being anticipated by the banking experts to a certain level. The deceleration in the credit demand by the private sector is likely to persist during the upcoming months of current financial year despite the fact that the impact of liquidity crunch would disappear after some time, enabling banks to fund the prevalent demand as expected by the SBP, in addition to falling prices of raw material. But inflationary pressures and high mark-up rates, power and energy crisis would restrain the industrial sector's manufacturing, power, construction and commerce and trade to get fresh loans and running finance. The private sector credit off-take witnessed an unusual break in credit cycle during 2008 unlike previous year as credit demand could not maintain its momentum after September 2008, on account of liquidity strains of banking system. According to the SBP monetary aggregates for the reviewed period of July-December 2008, the net federal government's borrowings soared by 97 billion rupees. The net government borrowings amounted to Rs288 billion during July 01 to December 20, 2008 as compared to Rs191 in previous fiscal. While the aggregate M2 growth fell by -0.59 percent. From July-Dec 20, 2008, the budgetary borrowings of the federal government saw an increase of 59 billion rupees as against such borrowings during the same period of last fiscal. In last financial year the budgetary borrowings of the centre amounted to 218 billion rupees during the said period. The government borrowed Rs 313 billion from the SBP for budgetary support during Jul-Dec FY09 as against Rs186 billion in last fiscal. According to the monetary survey from July to December 20, 2008, Net Foreign Assets of banking system showed negative growth whereby NFA fell by Rs -344 billion compared to a negative of Rs -135 billion. The contraction in NFA of banking system has been the result of widening external current account deficit. On the other hand, Net Domestic Assets stood at Rs 372 billion during the period under review from Rs 357 billion in FY08 witnessing sharp acceleration in NDA growth of the banking system.