State Bank of Pakistan comes up with new initiative to take government out of financial crunch
KARACHI - The State Bank of Pakistan (SBP) has decided to launch new initiative to help government come out of the financial crisis.
SBP will auction Rs5.15 trillion of Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) in September-November 2018 to assist the government in financing the budget deficit.
According to the central bank, it will auction Rs4.850 trillion of three, six and twelve months debt via T-bills and intends to float Rs150 billion of three, five, ten and twenty-year bonds as per tenor-wise targets of PIBs, reports *The News.*
Also, the central bank published the PIB floating rate auction calendar and revealed it would sell Rs150 billion of 10-year floating rate PIB on October 17th.
And the latest targets show the government would continue to depend on bank borrowing to manage its spending requirement.
The budget deficit clocked at 6.6 percent of gross domestic product in FY18 against 5.8 percent in FY17, touching a five-year high.
Also, this has given banks an opportunity to earn more money from easily investing in government securities amid a negative credit spread.
As per data released by SBP, commercial bank holdings in government securities posted a slight increase, touching Rs7.372 trillion at end of June 2018 against Rs7.363 trillion in the same period of last year.