KARACHI: As the government grapples with a budget deficit and a sluggish economy, the central bank’s auction calendar shows it plans to borrow a record Rs 11.1 trillion through treasury bills and bonds in the July-September quarter, JEE News reported Friday.
Most of the planned borrowings for the first quarter of FY24 will be through market treasury bills with maturities of three, six and 12 months.
According to the auction calendar released by the central bank on Thursday, the government will raise Rs 8.70 trillion through short-term paper auctions.
The sale of Pakistan Investment Bonds (PIBs) with fixed and floating rates will enable the government to borrow Rs 1.68 trillion from commercial banks.
It will borrow Rs 450 billion through variable rental rate and Rs 270 billion through fixed rate Government of Pakistan Ijara Sukuk.
T-bills and PIBs worth Rs 9.6 trillion will mature during July-September FY24.
According to the Ministry of Finance, the federal budget deficit increased by more than 3.5 trillion rupees in the first nine months of the current fiscal year due to a sharp increase in debt provision and spending on defense requirements, which accounted for two-thirds. All expenses.
Markup expenditure is budgeted at Rs 7.3 trillion for FY24, which is 85% higher than a year ago.
Markup costs are expected to increase due to higher interest rates to control inflation along with higher borrowing by the government to reduce the fiscal deficit.
Due to increased demand for government funding, public debt is accumulating faster, and the stalled International Monetary Fund (IMF) Extended Fund Facility (EEF) – which expires on June 30 had – dried up the inflow of foreign exchange.
Moreover, in the face of low revenue and high expenditure demands, the government was forced to increase its domestic debt.
Federal government debt rose 32 percent year-on-year to Rs 58.962 trillion at the end of May.
At the end of May, domestic debt rose 28 percent year-on-year to Rs 37.1 trillion.
Domestic debt increased by 19.2 percent during the 11 months of FY 2023.
Similarly, external borrowings rose 40 percent to Rs 21.9 trillion in May, compared to 31 percent in FY23.
Last week, the government reached a staff-level agreement with the IMF for a $3 billion standby arrangement.
An eight-month delay in the deal awaiting IMF board approval in July has brought some relief to Pakistan as it grapples with a severe balance of payments crisis and dwindling foreign exchange reserves.
The IMF agreement reduced the risk of a nation’s short-term default.
