The government managed to raise Rs 284b at an auction of market treasury bills (t-bills) on Wednesday, rejecting bids for 12-month papers and only accepting bids for three and six-month t-bills.
The amount was raised against a target of Rs 350b and goes to show that the government is borrowing largely from the State Bank of Pakistan (SBP). A report by the state bank shows that government borrowing in the first eight months of the ongoing fiscal year rose to Rs 1,015b.
The government raised Rs 140b for three-month t-bills, while Rs 143b were raised for the six-month t-bills in the recent auction. Bids worth Rs 20b were received for the 12-month papers but all of them were rejected.
The short-term investment indicates that the market expects higher inflation and, as a result, higher policy rates by the end of this fiscal year.
