KARACHI: The cash-strapped federal government borrowed some Rs 500 billion from scheduled banks for budgetary support during the first two weeks of this fiscal year (FY24).
According to the State Bank of Pakistan (SBP), the federal government’s borrowing for budgetary support rose by 218 percent during the initial two weeks of this fiscal year to finance the fiscal deficit.
The federal government has borrowed Rs 499.46 billion from scheduled banks between July 1, 2023 to July 14, 2023 as against Rs 157.44 billion in the same period of last fiscal year (FY22), an increase of Rs 342 billion.
The detailed analysis revealed that the federal government instead of borrowing has repaid a sufficient amount to the SBP.
Q1FY24: Cash-strapped govt to borrow record Rs11trn
The federal government has retired Rs 750 billion to the SBP during the first two weeks of this fiscal year. The retired amount is some 190 percent higher than the previous amount of Rs 258 billion repaid during the same period of last fiscal year.
During the period under review, Balochistan government returned Rs 1.339 billion to SBP, Khyber Pakhtunkhwa Rs 2 billion, Sindh government repaid Rs 8.16 billion to the SBP. The Punjab government borrowed Rs 39.4 billion from SBP to meet its financial needs.
Analysts said the rising fiscal deficit has compelled the federal government to borrow more from the domestic banking system. Overall, the federal government has planned to borrow over Rs 11 trillion in the first quarter (Jul-Sept) of FY24 from domestic resources to meet its financial requirements.
The federal government will borrow this amount through the auction for security papers including GoP Ijara Sukuk Fixed Rental Rate (FRR), Pakistan Investment Bonds (PIBs) Fixed Rate, PIBs Floating Rate and Government of Pakistan Market Treasury Bills (MTBs).
Some 78 percent of financing requirements will be made through sale of short-term government papers. The federal government intended to raise some Rs 8.7 trillion through the auction for MTBs during July-Sept of 2023 against the maturing amount of Rs 8.711 trillion.
Copyright Business Recorder, 2023