Qudsia Bano

The latest data on Pakistan’s broad money (M2) for the week ending December 26, 2025, show a robust growth across key financial indicators, pointing to a sustained expansion in the country’s money supply and reflecting increased liquidity within the economy, Wealth Pakistan reports.

The currency in circulation increased slightly from 10,899,511.08 million PKR on November 21, 2025, to 10,944,422.63 million PKR on December 26, 2025, reflecting consistent demand for physical currency within the economy, despite ongoing fiscal pressures and inflation.

The other deposits with the State Bank of Pakistan (SBP) declined slightly, from 45,659.93 million PKR on December 19, 2025, to 43,669.33 million PKR on December 26, 2025, suggesting adjustments in liquidity management by the central bank.

The total deposits with scheduled banks demonstrated a strong upward trend, increasing from 29,757,463.59 million PKR on December 19, 2025, to 30,653,005.66 million PKR by December 26, 2025. This increase was driven by growth in both demand deposits, which rose from 27,214,290.50 million PKR to 28,093,897.76 million PKR, and time deposits, which increased from 834,201.44 million PKR to 850,136.24 million PKR.

The Net Foreign Assets of the banking system showed a notable growth, with total foreign assets rising from 689,538.54 million PKR on December 19, 2025, to 840,944.96 million PKR on December 26, 2025.

The State Bank of Pakistan’s foreign assets grew from 2,097,506.01 million PKR to 2,119,279.85 million PKR over the same period, signalling an increase in external reserves.

In the government sector borrowings, net government sector borrowings rose to 35,210,768.39 million PKR on December 26, 2025, from 34,814,695.49 million PKR on December 19, 2025. Borrowings for budgetary support also grew, increasing to 34,151,036.39 million PKR on December 26, 2025, from 33,755,558.52 million PKR on December 19, 2025. This uptick reflects the government's continued reliance on borrowings to manage fiscal imbalances.

The credit to the private sector increased, reflecting sustained demand for credit and economic activity. The credit to non-government sectors rose to 13,251,362.00 million PKR on December 26, 2025, from 13,070,617.98 million PKR on December 19, 2025, signalling confidence in the private sector and ongoing investment.

M2 recorded year-on-year growth of 17.69% as of December 26, 2025, further underscoring the expanding money supply. The annual growth rate in broad money continues to reflect the financial sector's ability to adapt to the economic conditions while providing liquidity to both the public and private sectors.

In conclusion, the data on Pakistan’s M2 reveal a stable financial system, with growth in key metrics such as currency in circulation, deposits with scheduled banks, and credit to the private sector. Despite ongoing economic challenges, the financial system remains resilient, providing hope for continued future economic stability.

Credit: INP-WealthPk