Govt eyes Rs1.8 trillion loans from banks in next three months

KARACHI: The government has planned to borrow Rs1,775 billion through auctioning its papers in the next three months mainly for retiring matured debts and budget financing, the central bank’s data showed on Tuesday.

According to the State Bank of Pakistan’s (SBP), the amounts will be raised through the auction of market treasury bills (MTBs), Pakistan Investment Bonds (PIBs) and Government of Pakistan Ijara Sukuks during February to April, 2016. 

The maturing amount, during the period, is around Rs1,534 billion. The additional requirement for project finance is targeted at Rs240 billion.

Total Rs1,425 billion will be raised through the auction of treasury bills. The entire amount is projected to be used for repayment.

The auction target for PIBs has been set at Rs150 billion. The maturity amount, under this head, is Rs62.27 billion and the government’s additional requirement is targeted at Rs87.72 billion.

The government will raise Rs200 billion through Ijara Sukuks for development projects during the next three months. The maturing amount of Islamic mode of financing is Rs44.33 billion. However, amount of Rs155.66 billion will be raised for additional requirement.

The government borrows from the SBP through market related treasury bills and commercial banks through MTBs and PIBs. Provincial governments can directly borrow from the SBP. However, the provincial governments are not allowed to borrow from scheduled banks.

Domestic debt of the government has increased 12 percent to Rs12.87 trillion for the period ended December 2015 as compared with Rs11.51 trillion in the same period of the last year.

The rise in public debt burden was mainly attributed to sharp increase in floating debt, including treasury bills. The outstanding debt, on account of MTBs, posted a significant rise of 46.6 percent as the government owed Rs2.65 trillion to the banking system as compared with Rs1.811 trillion at the end of December 2014.

The SBP, in its latest quarterly report, said the government continued to borrow mainly from commercial banks and retired some of its debt to the SBP.

Long-term securities were attractive for banks as they were anticipating a cut in the policy rate.

As per the latest data, the total floating debt increased to Rs5.03 trillion as compared with Rs4.418 trillion, posting 14 percent growth.

Permanent debt of the government, including market loans, federal government bonds and prize bonds, surged 12.6 percent to Rs5.195 trillion as compared with Rs4.61 trillion.

Analysts said ease in the monetary policy stance benefitted the government in payment of mark-up on treasury papers. They said inflows from external resources also reduced the burden on local resources.

The SBP’s data showed that the federal government borrowed Rs672 billion between July 1, 2015 and January 15, 2016 from banks as against Rs696 billion in the same period of the last fiscal year.