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Govt borrows Rs215bn through PIBs

Govt borrows Rs215bn through PIBs

KARACHI: The government borrowed Rs215.3 billion through the auction of Pakistan Investment Bonds (PIBs) on Wednesday.

Raising more than double the Rs100bn target reflects its greater dependence on the banking money which was against the trend exhibited in the beginning of this fiscal year.

From the outset of this fiscal year the government started borrowing from the State Bank of Pakistan (SBP) while the commercial banks noticed debt retirement.

However, the scenario has started changing as the borrowing spikes, exceeding the targets set by the government.

For the last two years the government had been borrowing from the scheduled banks while it retired the debts of the SBP.

The borrowing from the central bank till August 12 reached Rs737bn against a net debt retirement

of Rs160bn during the same period of last fiscal year. The vital change in the borrowing trend was seen as the outcome of the government’s leaving the IMF.

The auction results showed that the government borrowed Rs100.7bn for three years, Rs64bn for 5 years and Rs50bn for 10 years; no bids were received for 20-year papers.

The bids offered amounted to Rs338bn indicating that the banks have not changed their strategy to park their maximum liquidity in the government papers.

The State Bank reported that the government has been retiring the debts of the scheduled banks and the amount of debts retired so far rose to Rs527bn against the net borrowing of Rs307.5bn during the same period of last fiscal year.

During the two months of June and July the maturity of PIBs were collectively about Rs1.2 trillion which created a big gap to be filled by the government and the government started borrowing more than the targets form the banks, said an analyst.

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