Karachi, July 7, 2023 – In a bid to meet its budgetary requirements, Pakistan has announced plans to raise Rs9.9 trillion through the auction of securities over the next three months.
The State Bank of Pakistan (SBP) has released an auction calendar for the period of July to September 2023, which includes the auction of Market Treasury Bills (MTBs), Pakistan Investment Bonds (PIBs), and Ijara Sukuk.
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According to the auction calendar for MTBs, the government aims to raise funds amounting to Rs8.70 trillion through six auctions during the three-month period. Interestingly, the maturing amount of MTBs during this period exceeds the target, standing at approximately Rs8.71 trillion.
The SBP plans to invite bidding for three separate auctions of PIBs, with a target of raising Rs480 billion. It is worth noting that the maturing amount for PIBs during this period is Rs860 billion.
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To compensate for the maturing amounts in PIBs and MTBs, the government intends to sell Ijara Sukuk. The SBP aims to raise Rs450 billion through the sale of GOP Ijara Sukuk on Variable Rental Rate (VRR). Additionally, Rs270 billion has been targeted through the auction of GOP Ijara Sukuk on Fixed Rental Rate (FRR).
The auction calendar reveals that the government is borrowing a substantial amount at a record-high interest rate to fulfill the repayment of maturing amounts. Notably, the interest rate in Pakistan currently stands at a record-high level of 22 percent.
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The SBP conducts these auctions of securities to arrange funds for the federal government’s budget financing needs.
The decision to raise such a significant amount highlights the government’s commitment to meeting its financial obligations and ensuring the smooth functioning of the economy. The success of these auctions will play a crucial role in determining the country’s fiscal stability in the coming months.
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