The government of Pakistan is all set to borrow rupees 5.7 trillion over the timeframe of the next three months to finance the current budget deficit.
The government would be borrowing rupees five thousand five hundred and fifty billion using Market Treasury Bills (MTBs) and rupees one hundred and fifty billion using the Pakistan Investment Bonds (PIB).
Over the span of next three months, the government would be conducting seven auctions of MTBs and three auctions of PIBs. The maturity period of Market Treasury Bills would be three, six and twelve months.
From August till the month of October the total maturity of MTBs is rupees fifty lacs ninety thousand seven hundred and sixty-five million and the new auction would be done for rupees fifty lac and fifty thousand million. This indicates a decrease in the total requirement of rupees forty thousand seven hundred and sixty-five million.
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The government would be borrowing in three, five, ten and twenty-year maturity Pakistan Investment Bonds. As per the indication of Auction Target Calendar during the next three months, PIBs total maturity would be of rupees one lac three thousand four hundred and twelve. During the same time span rupees, one lac fifty thousand would be borrowed in terms of PIB.
The Pakistan Investment Bonds coupon rates are as follows:
3 years—7.25 per cent
5 years—8 per cent
10 years—8.75 per cent
20 years—10.75 per cent
The new auction of PIBs would be conducted on a floating rate. The coupon rate for that would be decided in the auction.
The standard rate would be the most recent six-month MTB measured average yield.
In evert PIB auction, the government wants to borrow rupees 50,000 million.
The Pakistan Investment Bonds auctions would be held on the following dates of the current fiscal year 2018-19:
In the first quarter of the fiscal year 2018, the budget deficit was reduced by 0.9 per cent of GDP. This reduction was witnessed owing to the extensive tax collections and minimum expenditure. The reduction in the budget deficit goes well with the objective mentioned in the Fiscal Responsibility and Debt Limitations Act.
Previously, the government was likely to borrow Rs 5.5 trillion for the next budget 2018-19, however, the estimation has gone beyond what was expected earlier. As per sources, the budget presented for the current year was already much more than the budget of 2017-2018.