Pakistani Government to Borrow Over Rs 10 Trillion in Second Quarter

The Pakistani government plans to borrow over Rs 10 trillion in the second quarter (October-December) of this fiscal year (FY24) by selling securities to meet its financial needs.

The government will borrow this amount through auction of short-term and long-term government papers, including Pakistan Investment Bonds Fixed Rate, Pakistan Investment Bonds (PIBs) Floating Rate, and Government of Pakistan Market Treasury Bills (MTBs).

The State Bank of Pakistan (SBP), on behalf of the federal government, issued auction calendars on Tuesday for borrowing from the domestic banking system. According to the auction calendar, the government will borrow mostly through sale of short-term government papers.

The government intends to raise some Rs 7.905 trillion through sale of MTBs during the second quarter of this fiscal year, as against the maturing amount of Rs 8.948 trillion. This means that the government will borrow Rs 2 trillion less than the maturing amount during this quarter. Overall, some 7 auctions of T-Bills will be conducted to meet the financing target.

The government will also borrow Rs 2.76 trillion through sale of long-term Pakistan Investment Bonds (PIBs) during the second quarter of FY24. This includes Rs 480 billion through sale of PIB Fixed Rate, Rs 1.020 trillion PIB Floating Rate Semi-Annual Auction, and Rs 1.260 trillion against sale of 2-year and 3-year PIB (Floating Rate) Quarterly Auction.

Cumulatively, the federal government would raise Rs 10.665 trillion during Oct-Dec 2023 from the domestic market through sale of short term and long-term security papers to fill the financing gap.

In other words, the Pakistani government plans to borrow over Rs 10 trillion in the next three months to meet its financial needs. The government will borrow this money by selling government bonds to domestic banks and investors. This is a significant amount of money to borrow, and it is important to note that the government's debt burden is already high.