The federal government on Wednesday borrowed some Rs 290 billion through the auction for short-term papers to meet fiscal deficit. The borrowed amount is higher than the tentative target set by the government for this auction. "As for the last two months, the government is not raising funds through the long-term investment bonds, it has decided to borrow more to meet it financial requirements," analysts said.
Banks and financial institution were seeking higher profit on long-term government securities, therefore the government rejected all bids in the last two auctions of Pakistan Investment Bonds (PIBs), they added. They said that the massive and higher than target borrowing through the auction for Pakistan Market Treasury Bills (MTBs) also reflects that the government is focusing cheap borrowing.
The State Bank of Pakistan (SBP), on November 23, 2016, conducted the auction for the sale of 3-month, 6-month and 12-month Market Treasury Bills (MTBs) and received bids amounting to Rs 491.668 billion with a realized amount of Rs 480.377 billion. Bids worth Rs 259.168 billion were received for 3-month T-bills, Rs 194 billion for 6-month and 12-month bills fetched bids amounting to Rs 38.5 billion.
The federal government borrowed some Rs 295.362 billion with a realized amount Rs 289.744 billion through the auction for MTBs against the target of Rs 250 billion set for this auction. The cut-off yield of all MTBs remained stable in the auction.
Some Rs 187.891 billion (realized amount) was borrowed through 3-month MTBs at a cut-off yield of 5.9463 percent. Bids amounting to Rs 101 billion (realized amount) were accepted for 6-month at 5.9471percent. Some Rs 944 million were raised though auction of 12-month T-bills at a cut-off yield of 5.9485 percent.
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