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KARACHI: In order to finance the fiscal deficit, the federal government has planned to borrow Rs 4.9 trillion from banking sector during the next three months (Feb-April) of 2021. The State Bank of Pakistan (SBP) has issued two calendars for the sale of Pakistan Investment Bonds (PIBs) and Market Treasury Bills (MTBs). According to these calendars, the federal government intends to borrow a tentative amount of Rs 4.920 trillion from banking sector during next three months to fulfill its financial requirements.

The federal government will raise some Rs 620 billion through long-term investment bonds. Some Rs 350 billion will be borrowed through sale of PIB Fixed Rate and another Rs 270 billion through PIB Floating Rate. Three auctions of PIB Fixed Rate and six auctions of PIB Floating Rate will be held during Feb to April 2021.

In addition, the government has planned to borrow Rs 4.3 trillion from banking sector through sale of Pakistan Market Treasury Bills of 3-month, 6-month & 12-month in Feb-April of FY21. Auction for MTBs will be held fortnightly and totaled 6 auctions have announced by the State Bank. The targeted amount includes Rs 3.949 trillion of maturing amount and an additional amount of Rs 351 billion.

According to auction calendar, some Rs 1.4 trillion will be raised through two auctions in Feb 2021. An amount of Rs 1.75 trillion in March 2021 and remaining Rs 1.15 trillion will be borrowed in April 2021 through sale of short term government papers.

Analysts said that low foreign inflows and raising expenditures have compelled the government to borrow from the domestic banking system to meet the financial needs.

Copyright Business Recorder, 2021

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