Karachi June 14 2022: The government aims to raise Rs 4.85 trillion through auction of Market Treasury Bills (MTBs), Pakistan Investment Bonds (PIBs) Fixed, and Pakistan Investment Bonds (PIBs) Floating in July-August 2022 to meet its financing needs, State Bank of Pakistan (SBP) said on Monday.
The government would borrow Rs 3.8 trillion from auctions of MTBs, while it also planned to fetch Rs 1.05 trillion via sale of fixed and floating rate PIBs, according to an auction calendar released by the central bank.
SBP reported that it would sell Rs 450 billion worth of fixed-rate PIBs and Rs 600 billion worth of floating rate PIB.
In floating PIB it would auction Rs 300 billion worth in Semi-Annual Auction, out of which Rs 150 billion offered for five-year and Rs 150 billion offered for of ten-year PIB.
The central bank would also sell Rs 300 billion worth of floating PIBs in Quarterly Auction, out of which Rs 150 billion for two-year and Rs 150 billion worth for three-year.
The government raises funds fortnightly by auctioning T-bills, conventional, and Shariah-compliant bonds to plug budget holes, which increases its borrowing from the domestic debt market.
It is meeting financing requirements through borrowing from commercial banks as it is adhered to its commitment of zero borrowings from the central bank under the International Monetary Fund (IMF) $6 billion loan programme.
The banks invested heavily in T-bills and PIBs on receiving lucrative returns on such papers by the government. Reduction in the fiscal deficit was one of the important economic challenges the new government is facing.
The center’s immediate task is to manage foreign exchange reserves. For that, primary focus should be on negotiation with the IMF. In lieu of this, it will be pertinent to highlight that all IMF targets remain largely compliant.
