ISLAMABAD: Amid a revenue setback in December and higher expenditure, mostly for debt servicing, the government plans to borrow a record Rs4.8 trillion in the first three months of 2023 through market treasury bills (MTBs).

According to the auction target calendar issued by the State Bank of Pakistan (SBP) on New Year’s Eve on Saturday, it will hold a total of seven auctions beginning Jan 3 (tomorrow) — a special auction to generate Rs300 billion even though there is no debt maturing during the week.

The Federal Board of Revenue (FBR) on Saturday reported about Rs225bn revenue shortfall against the monthly target for December.

The funds would be raised through MTBs of various durations of three, six and 12 months.

SBP to hold seven auctions in January-March period

The government usually raises funds from the market (commercial banks) through sovereign-backed debt instruments periodically to make up for the shortfalls in its tax collection. The government public debt worth Rs4.45tr is maturing for repayment in the first quarter of 2023.

The SBP’s calendar showed it would hold three auctions in January with a target to raise Rs1.6tr against debt maturity of about Rs1.27tr. After the first auction for Rs300bn on Jan 3, two subsequent auctions would be held on Jan 11 and Jan 25 for Rs650bn each.

This will be followed by two auctions each in February and March with a target to mop up Rs1.1tr and Rs2.1tr, respectively. The debt maturing in February stands at Rs1.137tr and that of March at Rs2.05tr.

The calendar showed that the fourth auction would be held on Feb 8 for Rs800bn, followed by another for Rs300bn on Feb 22. The biggest auction would be held on March 8 for Rs1.8tr, followed by another for Rs300bn on March 22.

The SBP invites bids and tenders for the sale of MTBs and PIBs from ‘primary dealers’ on the respective auction dates through the Bloomberg Online Auction Module. About a dozen banking institutions serve as primary dealers and bid for government securities in SBP-held auctions besides selling these instruments to other retail or institutional clients and banks.

The bidding for all auctions would be held on the pre-announced data at 1000 hours and bids would be closed within two hours, with settlements due the next day.

The interest rates on MTBs have been increasing for several months and have touched 17pc, even though banks normally find secure returns on government papers while the private sector is unable to avail financing amid rising costs and declining industrial output and sluggish economic activities.

Published in Dawn, january 2th, 2023

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

China security ties
Updated 14 Nov, 2024

China security ties

If China's security concerns aren't addressed satisfactorily, it may affect bilateral ties. CT cooperation should be pursued instead of having foreign forces here.
Steep price
14 Nov, 2024

Steep price

THE Hindu Kush-Himalayan region is in big trouble. A new study unveiled at the ongoing COP29 reveals that if high...
A high-cost plan
14 Nov, 2024

A high-cost plan

THE government has approved an expensive plan for FBR in the hope of tackling its deep-seated inefficiencies. The...
United stance
Updated 13 Nov, 2024

United stance

It would've been better if the OIC-Arab League summit had announced practical measures to punish Israel.
Unscheduled visit
13 Nov, 2024

Unscheduled visit

Unusual IMF visit shows the lender will closely watch implementation of programme goals to prevent it from derailing.
Bara’s businesswomen
13 Nov, 2024

Bara’s businesswomen

Bara’s brave women have proven that with the right support, societal barriers can be overcome.