In order to meet the rising fiscal deficit, the federal government is to borrow some Rs 3.9 trillion from the domestic banking system through the sale of short-term and long-term investment bonds during the last quarter of this fiscal year (FY19).
The State Bank of Pakistan (SBP) Wednesday issued two calendars for the auction of Pakistan Investment Bonds (PIBs) Floating, PIBs Fixed Rate and Market Treasury Bills (MTBs). According to these auction calendars, the federal government has set a cumulative tentative borrowing target of Rs 3.9 trillion form domestic banking system during April-June of FY19.
The federal government intends to borrow Rs 600 billion through three auctions of long-term investment papers. Some Rs 300 billion will be borrowed through the sale of PIBs (Fixed Rate) and Rs 300 billion from PIBs Floating Rate.
An amount of Rs 3.3 trillion will be obtained from banking sector through the sale of MTBs of 3-month, 6-month and 12-month period. T-Bills target includes Rs 3.102 trillion of the maturing amount and an additional amount of Rs 198 billion. The MTBs auctions will be held fortnightly and total 6-auctions have been announced by the State Bank for next three months.
The first auction for T-bills will be held on April 10, 2019 for the sale of Rs 350 billion worth MTBs. The second auction has been scheduled for April 24, 2019 with a target of Rs 150 billion.
Two auctions for an amount of Rs 2 trillion and Rs 600 billion will be held on May 8 and May 22, 2019, respectively. Similarly, two auctions of short-term bonds are scheduled for June 5 and June 19, 2019 with borrowing target of Rs 100 billion each.
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