By Staff Reporter
KARACHI: The government is set to borrow roughly Rs5 trillion from domestic banks in the January-to-March quarter through auctions of government securities, leaning heavily on local lenders to plug its fiscal deficit as external funding remains scarce.
The State Bank of Pakistan released auction calendars on Friday for Pakistan Investment Bonds and Market Treasury Bills covering the third quarter of the fiscal year that runs through June. The move highlights Islamabad’s dependence on internal sources to meet funding needs, with short-term Treasury bills expected to account for the lion’s share of the borrowing.
Analysts note that without adequate inflows from abroad, the government will continue tapping domestic markets aggressively. Most of the planned fundraising will come via short-term instruments like Market Treasury Bills, which offer quicker liquidity but add to the pressure on banks’ balance sheets.
Under the schedule, the government aims to raise about Rs3.25 trillion through Treasury bills in the quarter, against maturing debt of Rs3.589 trillion. That includes Rs1.55 trillion from two auctions in January, Rs950 billion in February and Rs750 billion in March, with two auctions slated each month.
For longer-term borrowing, the plan calls for Rs1.65 trillion via Pakistan Investment Bonds. That breaks down to Rs1.35 trillion from fixed-rate bonds auctioned on January 1, February 6 and March 11, with a target of Rs450 billion per sale. Another Rs300 billion will come from semi-annual floating-rate bonds, spread across six auctions of Rs50 billion each.
In total, the quarter’s borrowing will add up to Rs4.9 trillion, according to the central bank’s figures, helping to finance the deficit amid slower-than-expected revenue growth. Recent cuts to the key policy rate should keep interest payments below budgeted levels for the full year, potentially easing the deficit and reducing overall borrowing needs.
Still, tax collections by the Federal Board of Revenue rose just 10.2% year-over-year in July-to-November, far short of the pace required to hit annual targets. That means a sharp pickup is needed in the remaining seven months. In its latest monetary policy meeting, the central bank’s committee stressed the need for structural overhauls, including expanding the tax base and privatising unprofitable state-owned enterprises. Such steps, it said, would bolster fiscal reserves while freeing up resources for infrastructure and social programs.
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