KARACHI - The central governments borrowing from the banking system for budgetary support has increased by Rs154 billion to Rs431 billion in July-April FY11 against Rs277 billion during the same period of last fiscal year, the SBP reported on Tuesday. From July 01 until April 16, 2011, net governments sector borrowing to meet deficit financing surged to Rs290 billion while the inflationary borrowings from the central bank also stood higher at Rs123 billion, compared with Rs90 billion during the equivalent months of past fiscal year. According to the provisional data, posted by the State Bank on its website on monetary aggregates, scheduled banks, as on April 16, 2011, lent Rs308 billion to the federal and provincial governments and their agencies including AJK government to meet budgetary requirements and commodity operations. Out of a total Rs431 billion government budget-related borrowing, the federal government borrowed Rs179 billion as against of Rs73 billion from year earlier. Similarly, the provincial governments borrowed Rs55 billion from the SBP during the period under review. SBP numbers showed that within the banking system, the bulk of budgetary financing during Jul-Apr FY11 were met from scheduled banks as banking system financed Rs303 billion to the central and provincial governments for commodity operations during the reported period of the current financial year. Net foreign assets of the banking system rose to Rs155 billion from Rs40 billion, showing 7.08 per cent growth while net domestic assets up Rs370billion from Rs322 billion. The M2 growth was increased to 9.09 per cent over the same period last year. Expansion in the private sector credit growth was witnessed during July-April 2010-11 as it soared to Rs188 billion compared to the credit of Rs135 billion in the same period last year. The Banking experts believe fall in non-bank and external financing was primarily responsible for the escalation of governments borrowing. Moreover, the SBP second quarterly report stated that the government was relying more on central banks borrowing till November 2010, and it was only in the latter half to December 2010 that the government retired a large part of its debt to SBP. In addition, the government became more aggressive in T-bill auctions, accepting amounts in excess of announced targets.