Govt expected to borrow Rs4.76trln in three months

KARACHI: The government is expected to borrow Rs4.769 trillion through the sale of treasury and long-term papers in December 2017 to February 2018 to cover the budget deficit, the State Bank of Pakistan’s (SBP) auction calendar said on Thursday.

The central bank would sell Rs4.725 trillion worth of three-, six-, and 12-month Market Treasury Bills (MTBs) at the auctions to be held from December 6, 2017 to February 14, 2018.

The central bank would also sell Rs44.4 billion worth of three-, five-, 10 and 20-year debt through Pakistan Investment Bonds (PIBs). Analysts said the estimated borrowing figures for the December-February FY18 period remain higher owing to growing budget deficit.

“The government’s appetite for bank lending continues to rise to plug its increasing fiscal deficit. Its spending is more than it collects in taxes,” said a banking sector analyst. “Climb in borrowing, either by selling bonds or through direct loans, has also indicated acceleration in various development projects under China-Pakistan Economic Corridor,” the banker said.

The government has accelerated the borrowing plans to increase public spending ahead of general elections next year, according to another analyst. The government borrowed Rs396.6 billion from banks between July 1 and November 17, 2017 for budgetary support. It borrowed Rs371 billion during the same period of last fiscal year.

“An important development in the monetary sector is a visible change in the pattern of government borrowing for budgetary financing. Instead of relying heavily on central bank financing like last year, the government is securing funds both from SBP and scheduled banks,” said the SBP in its latest monetary policy statement.