Domestic banking sector: Pakistan govt sets Rs5.75trn borrowing target for Q1

KARACHI: The federal government has set a borrowing target of Rs 5.575 trillion from the domestic banking sector through the sale of government securities during the first quarter of the current fiscal year (FY26) to finance the fiscal deficit.

This target represents a 40 percent increase compared to the first quarter of FY25, when the borrowing goal was set at Rs 3.970 trillion.

The State Bank of Pakistan (SBP) on Monday issued calendars for the auction of Pakistan Investment Bonds (PIBs) and Government of Pakistan Market Treasury Bills (MTBs) for July-September period of this fiscal year.

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The government is intended to meet the major financing requirements through sale of short-term government security papers-MTBs. The federal government has planned to raise some Rs 2.4 trillion through sale of PIBs during the first quarter of this fiscal year. Some Rs 1 trillion will be borrowed through sale of PIB (Fixed Rate), Rs 1.4 trillion through PIB (Floating Rate) Semi-Annual auction.

Auctions for PIB (Fixed Rate) will be held on July 16 and August 1, 2025 with a targeted borrowing of Rs 300 billion for each auction, while another Rs 400 billion will be raised in September 2025. In addition, some six auctions of PIB (Floating Rate) will be held during the first quarter of FY26 to achieve the borrowing target of Rs 1.4 trillion.

The federal government also intends to raise Rs 3.175 trillion through sale of short-term government security papers during July-Sep of FY26. Overall, some 6 auctions of T-Bills to be conducted to meet the financing target. First auction of MTBs will be held on July 9, 2025 with a tentative target of Rs 1.35 trillion.

Economists said the less than revenue collection has compelled the government to borrow more from the domestic resources to finance the fiscal deficit. They said that massive borrowing resulted in over Rs 8 trillion interest payments in this fiscal year.

Copyright Business Recorder, 2025