KARACHI: The government likely to borrow an amount of Rs6,300 billion from commercial banks through auction of market treasury bills (MTBs) during first quarter (July – September) of current fiscal year.
According to auction target for MTBs issued by State Bank of Pakistan (SBP), the amount would be raised through seven auctions during the period.
The government borrows from commercial banks through sale of commercial papers for budget financing.
The details of auctions showed the government would borrow primarily to repay the matured amount. The details further showed that out of Rs6,300 billion, an amount of Rs5,065 billion would be spent on repayment against matured amount.
The remaining amount of Rs1,234.55 billion would be utilized for budget financing.
Banking analysts said that the government had decided to change the borrowing pattern. During the past fiscal year most of the borrowings were made through central bank. However, the government under IMF loan program agreed not to borrow from the SBP.
The auction target showed that an amount of Rs300 billion would be raised through sale of Pakistan Investment Bonds (PIBs) of fixed rates.
While, an amount of Rs400 billion would be raised through sale of PIB (floating rates).
Analysts said that the banks were taking more interest in government maturities due to frequent increase in policy rate by the SBP. The banking sector is anticipating more hike in interest rate by the SBP during remaining months of current year.