Pakistan State Bank to take loan of Rs 1.9 trillion to manage budget financing

Pakistan State Bank to take loan of Rs 1.9 trillion to manage budget financing

KARACHI: The government has planned to raise Rs1,900 billion through the sale of treasury bills to banks during the last quarter for the current fiscal year in order to meet the budgetary financing  

The State Bank of Pakistan (SBP), in an auction target report on Tuesday, said the government intended to borrow Rs1,750 billion through market treasury bills and Rs150 billion through Pakistan investment bonds during the April-June period.  Experts attributed the hefty borrowing during the last quarter to an expected increase in development expenditures. 

The government wanted to allocate Rs1,000 billion under public sector development programme for the next fiscal year of 2017/18 as against Rs655 billion in the current fiscal year. 

The experts said the banks would be glad to lend funds to the government at the prospect of rebound in interest rate, driven by an untamed inflation. March consumer price inflation reached two-year high of 4.9 percent due to surging food prices. The SBP, however, kept its key policy rate for April-May unchanged at 5.75 percent. The experts said the government would turn to banks’ liquidity as it entirely relied on the central bank for debts in the past. 

The latest monetary aggregate data revealed that the government borrowed Rs1,028 billion from the SBP during the first nine months of the current fiscal year as against the repayment of Rs347 billion in the same period a year ago. 

In July-March, the government retired total outstanding loan of Rs102 billion of banks as against Rs1,079 billion borrowing in the corresponding period of the last year.