KARACHI: The federal government’s borrowing from scheduled banks for budgetary support saw a sharp decline of 58 percent in the first two months of fiscal year 2025 (FY25).
The State Bank of Pakistan’s (SBP) statistics reveals a significant decline in federal government borrowing from scheduled banks during the initial months of this fiscal year.
The SBP on Tuesday reported the federal government borrowed Rs 660.3 billion from scheduled banks during July 1 and August 30, 2024, compared to Rs 1.584 trillion during the same period in FY24. This represents a substantial decline of 58 percent or Rs 924.3 billion.
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Additionally, the federal government repaid Rs 176.6 billion to the SBP in the first two months of this fiscal year, compared to Rs 714 billion repaid in the corresponding period of FY24.
During the period under review, overall, net government sector borrowings including budgetary support and commodity financing fell by 27 percent, or Rs 248.153 billion. For the period of July to August FY25, both federal and provincial governments raised Rs 681 billion, for budgetary support, commodity financing and other purposes compared to Rs 929 billion in the same months of the previous fiscal year.
Analysts noted that recent improvements in foreign inflows and revenue collection have led to a reduction in borrowing for budgetary support. However, they anticipate that borrowing may increase in the future to meet ongoing financial needs.
Relative to the federal government, during the period under review, Balochistan government returned a loan of Rs 23.4 billion and Khyber Pakhtunkhwa Rs 30 billion to the State Bank.
The Sindh government borrowed Rs 5 billion and the Punjab government Rs 294 billion from the SBP during July 1 to Aug 30 FY25.
Meanwhile, on Tuesday, the State Bank issued two auction calendars for the sale of short-term and long-term government papers to borrow Rs 6.295 trillion for the federal government during the next three months (Sep-Nov). An amount of Rs 3.475 trillion will be raised against the sale of 3-month, 6-month and 12-month Market Treasury Bills (MTBs).
In addition, Rs 2.820 trillion will be borrowed through sale of long-term Pakistan Investment Bonds (PIBs) during the next three months.
Copyright Business Recorder, 2024
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