The government is set to borrow Rs3.175 trillion from banks through treasury bills and bonds over the next three months (Feb-April), aiming to bridge the fiscal deficit, according to an auction calendar issued by the State Bank of Pakistan (SBP).Â
The primary means of borrowing will involve fixed and floating-rate Pakistan Investment Bonds (PIBs) with varying maturities ranging from three to 30 years.
As per the auction calendar, the government plans to raise Rs1.645 trillion through long-term paper auctions. Commercial banks are expected to contribute Rs1.530 trillion through market treasury bills during this period.
The government’s reliance on bank borrowings has intensified due to a widening budget deficit, increased markup payments on domestic debt, and elevated interest rates.
In addition to bank borrowings, the government utilises the Pakistan Stock Exchange (PSX) to conduct local currency Sukuk auctions as part of its funding strategy.
The introduction of Shariah-compliant securities aims to broaden the pool of potential investors. Additionally, the government anticipates relief on domestic borrowings with the possibility of securing foreign assistance from friendly countries.
Pakistan’s budget deficit reached Rs2.4 trillion or 2.3 percent of the GDP in the first half of fiscal year 2024, up from Rs1.7 trillion or 2 percent of GDP in the same period last year.
Total revenue for July-December FY24 increased by 46 percent year-on-year to Rs6.9 trillion, while total expenditures rose by 45 percent to Rs9.3 trillion.
The government’s markup payments surged to Rs4.2 trillion in July-December FY24, representing a 64 percent increase from the previous year.
This escalation is attributed to high interest rates and the growing debt stock.
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