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Print Print 2023-05-13

May-July: govt intends to borrow record Rs9.4trn

  • Presently, government is the single largest borrower from commercial banks
Published May 13, 2023

KARACHI: A cash-strapped government intends to borrow a record Rs 9.4 trillion from the domestic banking sector during three months (May-July) of 2023 to meet its rising financial requirements.

Analysts said that in absence of foreign funding the government is completely relying on the domestic debt market and its borrowing is gradually increasing to finance the fiscal deficit.

The policy rate is at a peak level of 21 percent and a tight monetary policy stance has made the domestic borrowing more expensive for the government. Presently the government is the single largest borrower from commercial banks, they added.

Jul-Mar 2022-23: Govt borrowing declines 39.18pc to $7.76bn YoY

Major chunk of the borrowing will be consumed to repay the previous loans obtained from the domestic financial institution. Government securities worth Rs 8 trillion are being matured in the next three months and the federal government will pay this amount through fresh borrowing.

The State Bank of Pakistan (SBP) on Friday issued six auction calendars for the sale of Market Treasury Bills (MTBs), Pakistan Investment Bonds (PIBs) and Government of Pakistan Ijara Sukuk (GIS).

According to these calendars, the federal government has planned to borrow a tentative amount of Rs 9.44 trillion from the banking sector through auction of security papers during the next three months to fulfil its financial needs.

The federal government will raise Rs 7.5 trillion from the banking sector through sale of Pakistan Market Treasury Bills of 3-month, 6-month & 12-month in May-July of 2023.

On behalf of federal government, a total 7 auctions of MTBs have been announced by the State Bank, out of which one auction has already been conducted on May 3, 2023, while two more auctions will be held this month, two in June and two in July to achieve the borrowing target. The targeted amount of MTBs includes Rs 7.084 trillion of maturing amount and an additional amount of Rs 416 billion.

As per the auction calendar, the federal government has planned to borrow some Rs 1.49 trillion through sale of long-term Pakistan Investment Bonds (PIBs). Some Rs 400 billion will be raised through PIB fixed rate, Rs 450 billion PIB (Floating Rate) Semi-Annual Auction and Rs 640 billion against PIB (Floating Rate) Quarterly Auction during May-July of this calendar year. The maturing amount for the PIBs is Rs 674 billion in the next three months.

An amount of Rs 360 billion will be raised through auction of GOP Ijara Sukuk Fixed Rental Rate (FRR) and Rs 90 billion against the sale of GOP Ijara Sukuk Variable Rental Rate (VRR) during the next three months.

Copyright Business Recorder, 2023


Comments are closed.

Ash Chak May 13, 2023 06:38am
9.4 Trillion PKR at 21% interest? Yikes.
thumb_up Recommended (0)
Tulukan Mairandi May 13, 2023 11:29am
Hallmarks of a failed bankrupt state intending to stay afloat on other people's money, for a huge fee which will also be borrowed. It's time to end it by balkanizing.
thumb_up Recommended (0)
amigo May 13, 2023 01:16pm
Financial information is very depressive then local news.
thumb_up Recommended (0)
Tulukan Mairandi May 13, 2023 02:21pm
Pure Islamic Republic of Pakistan borrowing at Riba rate of 21%? Isn't Riba (interest) haraam just as pork and liquor are?
thumb_up Recommended (0)
Jani Walker May 13, 2023 03:52pm
@Tulukan Mairandi, Yes. But they are delicious.
thumb_up Recommended (0)
Dr. Omer Javed May 13, 2023 08:14pm
Monetary austerity, with policy rate at 21% has ballooned domestic debt, increased costs for govt. & private sectors. Fiscal/governance policy needs to play a leading role in dealing with inflation, given the significant supply-side, & over-profiteering nature of inflation. Also, through better incentivization of exports, imported inflation needs to be checked meaningfully.
thumb_up Recommended (0)
Mushtaque Ahmed May 13, 2023 11:29pm
A financial prescription for still higher inflation to follow! It will further marginalize the poor and make them even poorer.
thumb_up Recommended (0)

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