Government to raise Rs5.7trln on debt issuance in the first quarter of fiscal 22

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KARACHI: The government has targeted a borrowing of Rs5.725 billion in the domestic market by selling debt securities in the first quarter of fiscal year 2022 to finance the budget deficit, the central bank’s auction schedule said on Friday.

Between July and September, the government will raise 4.7 trillion rupees through the auction of market treasury bills (MTB), while it also aims to withdraw 975 billion rupees through the sale of Pakistani investment bonds ( GDP).

The State Bank of Pakistan (SBP) would sell Rs 450 billion of GDP at three, five, 15, 20 and 30 year fixed rates and Rs 210 billion for five and Rs 210 billion for three rate GDP. variable from one year. It would also auction 105 billion rupees of a two-year variable rate GDP. The latest auction calendar shows that the government wants to attract more funds from GDP sales, but it has not increased the target amount to be generated by treasury bill auctions.

Government interest charges remain high, despite the fact that interest rates have fallen sharply, mainly due to long-term government borrowing at higher rates through fixed rate GDPs.

It is estimated that the government will borrow 2,417 trillion rupees from banks and 1,246 trillion rupees from external sources during fiscal year 2022 to fill budget gaps. The budget deficit is also expected to be financed by the proceeds of privatization of Rs 252 billion.

The government is meeting its commitment of zero new borrowing from the central bank, so it depends on banks and non-banks programmed for its financing needs.

The government will meet its spending needs by issuing government securities such as GDP Treasury bills and Sukuk.

The increased budget deficit, the ambitious revenue target and increased development spending could increase government borrowing from banks this fiscal year. The government allocated Rs 900 billion to the federal public sector development program in fiscal year 2022, 38% more than last year. Analysts say fiscal 2022 will be another difficult year for the government to contain the budget deficit, targeting Rs.3.420 billion or 6.3% of GDP for this year, compared to the revised estimate. of 3,195 trillion rupees or 7% for fiscal year 2021.

Analysts expect the budget deficit to be in the range of 7.0-7.5% in FY2022, with part of the deficit covered by reduced spending, both current and development. . The primary deficit is expected to be between 1.0 and 1.5%.


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