The government plans to issue short-term paper soon through the Central Directorate of National Savings, a Finance Ministry official told Reuters on Wednesday. "The government is planning to launch short-term paper of 3-, 6-, and 12-month duration through the Central Directorate for National Saving for the general public," the official, who requested anonymity, said.
The source said the general public and public sector corporations and enterprises would be able to subscribe. The de facto finance minister Naveed Qamar said on Tuesday while addressing the Karachi Stock Exchange the government plans to bring net borrowing from the central bank to zero percent to reduce pressure on the bank to maintain a tight monetary stance.
This means the amount government borrows from the State Bank of Pakistan in fiscal year 2008/09 (July/June), would be paid back within the year. The official said funds generated by the issuance of short-term paper would be used to retire debt to the State Bank.
As of June 28, with two days left until the end of the 2007/08 fiscal year, the government's incremental borrowing from the State Bank was Rs 633 billion ($8.9 billion). The official said the short-term paper would provide a better rate of return for the public than they received from bank deposits. "The government is creating competition in terms of deposit mobilisation," he said.