KARACHI: The federal government has planned to borrow Rs 3.97 trillion from the domestic banking sector during the first quarter of this fiscal year (FY25) to finance the fiscal deficit.
The State Bank of Pakistan (SBP) has issued calendars for the auction of Pakistan Investment Bonds (PIBs) and Government of Pakistan Market Treasury Bills (MTBs) for July-September of FY25. According to the auction calendar, major financing requirements will be made through sale of long-term government papers.
The federal government is intended to raise some Rs 2.36 trillion through sale of PIBs during the first quarter of this fiscal year. Some Rs 440 billion will be borrowed through sale of PIB (Fixed Rate), Rs 1.8 trillion through PIB (Floating Rate) Semi-Annual auction and Rs 120 against PIB (Floating Rate) Quarterly Auction.
Budgetary support: Govt borrowing rises 116pc
Some Rs 1.61 trillion will be borrowed through sale of short-term government security papers during July-Sep of FY25. Overall, some 6 auctions of T-Bills to be conducted to meet the financing target.
Analysts said the country’s revenue collection and foreign inflows are not sufficient to meet the budget expenditures that compel the federal government to borrow from Schedule banks to finance the fiscal deficit.
The federal government has borrowed a record Rs 8.4 trillion from the domestic banking system during the last fiscal year (FY24) for budgetary support to finance the fiscal deficit.
The SBP on Thursday reported that the federal government borrowing from scheduled banks for budgetary support rose significantly by 128 percent during FY24 mainly due to less than target revenue collection and to slow foreign inflows.
The federal government’s borrowing for budgetary support has increased by Rs 4.758 trillion during 1st July 2023 to 28th June 2024. Overall, the federal government raised Rs 8.475 trillion from the scheduled banks for budgetary support during the last fiscal year compared to Rs 3.717 trillion in the previous fiscal year (FY23).
However, the federal government instead of borrowing made a repayment of Rs 608 billion to the State Bank of Pakistan during FY24 as against a borrowing of Rs 196 billion in FY23.
Copyright Business Recorder, 2024
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