SBP to raise Rs3.80 trillion through MTBs, PIBs sale

 KARACHI: The State Bank of Pakistan (SBP) will auction treasury and long-term papers worth Rs3.80 trillion during September-November 2017 period to finance the increasing budget deficit, the central bank said on Friday.  

In its latest auction calendar, the SBP said the government planned to borrow Rs3.550 trillion through the sale of three-, six-, and 12-month market treasury bills. The government would also raise Rs250 billion through the sale of three-, five-, 10-year, and 20-year Pakistan Investment Bonds (PIBs).

Analysts said the government appears to be continuing with its dependence on bank borrowings via short-term and long-term securities to meet deficit spending in the year. The government borrowed Rs8.379 trillion from banking system for budgetary support in July against Rs7.38 trillion last year. Similarly, bank investment in the government securities increased 12 percent to 7.4 trillion in July 2017.  The recent MTBs and PIBs auctions showed that investors were more interested towards shorter-dated T-bills as they were not expecting the interest rate to fall further.