KARACHI - In sharp contrast to the government's claim, the budgetary borrowings of the federal government have surged to Rs 411 billion during July-March FY09. The federal government's borrowings for inflationary and budgetary support rose by Rs 97 billion from July 01, 2008 to March 07, 2009 as against such borrowings from the same period of last fiscal. In last financial year the budgetary borrowings of the Centre stood at Rs 314 billion during the said period. It is pertinent to mention here that the size of the government budgetary borrowings from the scheduled banks has increased substantially as the government had borrowed Rs63 billion from the commercial banks while borrowed Rs348 billion from SBP during the period under review. According to SBP monetary aggregates for the reviewed period of July-March 2008-09, the net federal government's borrowings for budgetary support soared to Rs424.428 billion in July-March 2008-09 as against Rs299.779 billion in the same period of FY08 while the aggregate M2 growth dipped by 2.38 percent over 7.71 percent of previous fiscal. Meanwhile, the growth in the private sector credit of-take by the schedule banks decreased by 61.98 percent during Jul-Mar FY09 amid slowdown in the demand of working capital loans and fixed investments from the corporate and industrial borrowers for their expansion relate activities. The private sector credit disbursement from the scheduled banks declined by 181 billion rupees from July to March, 2008-09, indicating banks' strong reluctance to extend credit to the private sector due to their increased participation in the process of T-Bills (treasury bills) auctioning. The domestic banks disbursed Rs111.452 billion from July 1 to March, 2009 as against Rs292.223 billion of last fiscal, according to SBP monetary statistics. This trend caused the growth in loan and advances portfolio of the banks' towards corporate sector declined on account of potential liquidity risk. However, the credit expansion by the banks to the PSEs surged to Rs57.608 billion in July-March FY09 as against Rs31.191 billion during the corresponding period of last year. According to the monetary survey from July 1 to March 07, 2009, Net Foreign Assets of banking system showed downward trend whereby NFA amounted to Rs-292.751 billion compared to Rs-213.081 billion. On the other hand, Net Domestic Assets amounted to Rs404.423 billion during the period under review from Rs526.532 billion in FY08, witnessing a meagre recovery in NDA growth of the banking system.