KARACHI: In the absence of sufficient foreign inflows, the federal government has planned to borrow over Rs 11 trillion in the first quarter (Jul-Sep) of this fiscal year (FY24) from domestic resources to meet its financial requirements.
The federal government will borrow this amount through auction of security papers including GOP Ijara Sukuk Fixed Rental Rate (FRR), Pakistan Investment Bonds Fixed Rate, Pakistan Investment Bonds (PIBs) Floating Rate and Government of Pakistan Market Treasury Bills (MTBs). The State Bank of Pakistan (SBP), on behalf of the federal government on Thursday issued six auction calendars for borrowing from domestic banking system.
According to auction calendar, some 78 percent of financing requirements will be made through sale of short term government papers. The federal government is intend to raise some Rs 8.7 trillion through auction of MTBs during July-Sep of 2023 as against the maturing amount of Rs 8.711 trillion.
Govt debt stocks hit all-time high of Rs59trn
The maturing amount is some Rs 11 billion higher than fresh borrowing. Overall some six auctions have been announced in the next three months by the SBP to meet the financing target.
The massive borrowing will be made in September 2023, in which MTBs auction target is Rs 4.2 trillion, while Rs 1.8 trillion will be borrowed in July 2023 and Rs 2.7 trillion in August as against sale of short term government papers.
In addition, the federal government has planned to borrow worth Rs 1.68 trillion through sale of long term Pakistan Investment Bonds (PIBs) during the first quarter of FY24. This include Rs 480 billion through sale of Government of Pakistan Investment Bond (PIB) Fixed Rate, Rs 480 billion PIB Floating Rate Semi-Annual Auction, Rs 720 billion against sale of 2-year and 3-year PIB (Floating Rate) Quarterly Auction.
Similarly, the federal government will obtain financing of Rs 720 billion against sale of Government of Pakistan Ijara Sukuk. Auction target for the sale of GOP Ijara Sukuk Fixed Rental Rate (FRR) is Rs 270 billion and Rs 450 billion through auction of GOP Ijara Sukuk Variable Rental Rate (VRR).
Cumulatively, the federal government is intend to raise record Rs 11.1 trillion from domestic market through sale of short term and long term security papers to fill the financing gap.
Copyright Business Recorder, 2023