Pakistan raises a massive Rs 2.14 trillion through Treasury Bills auction
Pakistan has successfully secured an impressive sum of Rs
2.14 trillion through the sale of treasury bills in an auction conducted by the
State Bank of Pakistan (SBP) on Wednesday.
The auction featured Market Treasury Bills (MTBs) with
varying maturities of 3 months, 6 months, and 12 months. Despite offering a
substantial total of Rs 4.58 trillion in the auction, the central bank accepted
the majority of the bids.
Here's a breakdown of the funds raised through the accepted
bids:
• Rs 2.04 trillion from the sale of 3-month MTBs • Rs 165
million from 6-month MTBs • Rs 1.22 billion from 12-month MTBs
Government borrowed
377% more from banks in first seven months of current fiscal
Following the SBP's decision on September 14, 2023, to keep
the policy rate unchanged, the cut-off yields for government securities
witnessed significant reductions in the latest auction:
• The cut-off yield for 3-month papers decreased by 171 basis points to 22.7698 percent.
• The yield for 6-month papers saw a reduction of 199 basis points to 22.80 percent.
• 12-month papers experienced a decline
of 217 basis points to 22.9 percent.
The government of Pakistan relies on treasury bill auctions
as a means to raise funds for budgetary financing. Financial institutions
showed active participation, particularly in short-term maturities, during this
auction.
Government's plan to
secure Rs11.09 trillion from banks
Challenging economic conditions have discouraged fresh
borrowing by the private sector, leading banks to invest their funds in
government securities due to their safety. Recent data from the SBP indicates
that, from July 1 to September 8 of the current fiscal year, the federal
government borrowed Rs 1.51 trillion from the banking system, compared to Rs
999 billion during the same period in the previous fiscal year.
In contrast, the private sector has chosen to retire debt
rather than seek new loans, with debt retirements totaling Rs 283 billion in
the same period of the current fiscal year.
The significant funds raised through the treasury bill
auction are expected to play a pivotal role in meeting the financial requirements
of the government and supporting its budgetary needs.
Source: pkrevenue.com