KARACHI - The private sector credit disbursement by the scheduled banks depicted a marginal increase of 12 billion rupees from July to November 2008. The banks disbursed Rs 145b from July 1 to Nov 29 against Rs 133b disbursed during the same period of last fiscal that shows deceleration in growth of the credit off-take by the private sector. The marginal growth in credit obtained by the private sector during five months of the current fiscal seemed the outcome of increase in the mark-up rates and overall slump in the national economy. The high input cost in sectors such as agriculture, textile, edible oil, rice basic iron and steel also led to a nominal growth in credit demand. Since the financing need is also correlated with imports, a surge in import demand (particularly of raw cotton due to poor domestic harvest) added to financing requirements of importers. Similarly, exporters of cement and chemicals needed more funding to meet their growing export demand and capacity expansion in some sectors (such as textile and cement) has also augmented their demand of working capital. Despite government commitment to limit the inflationary pressure and budget related borrowings from SBPduring the remaining fiscal, the GoP borrowed Rs 356 billion, showing an increase of 187b rupees in 150 days of FY09 from Rs 169b last year from SBP for budgetary support. The net federal government's borrowings soared by 112b to 263 rupees during July 01 to Nov 29, 2008 from Rs181 in previous fiscal. According to the SBP monetary aggregates for the period of July-November 2008, the aggregate M2 growth fell to -0.23pc. According to the monetary survey from July to Nov 29, Net Foreign Assets of banking system showed negative growth whereby NFAs showed negative growth of Rs -356 billion compared to Rs 102 billion of the corresponding period. The contraction in NFA of banking system has been the result of widening trade deficit and lower net receipts of external financing. It seems that the government's budgetary-related borrowings from the domestic banking system (SBP & Scheduled banks) are likely to move down from the next month in the back drop of monetary and fiscal tightening strategy and substantial cut in development expenditures as a part of IMF-supported macroeconomic stabilisation package. The govt and the central bank have together developed a macroeconomic stabilisation package whose implementation is well underway and has helped to have a buy-in from the international agencies. This programme is now a corner stone of the Stand-By Arrangement negotiated with the IMF for the 23-month period. Macroeconomic stabilisation is needed for proper and effective fiscal tightening to ensure that the monetary tightening, which has proceeded fiscal tightening, yields the desired impact on inflationary pressures. On fiscal side, the govt has phased out most subsidies and remaining will be rationalised, while the tax administration reforms will provide and impetus to revenues, which with the re-installing of the privatisation process, will help in financing poverty alleviation programmes.