Govt borrows double the T-bill auction target

The cash-starved PMLN-led coalition government on Tuesday borrowed Rs655 billion exceeding the Rs300bn auction target for the treasury bills by 118 per cent without making any upward revision in the cut-off yields. The State Bank of Pakistan (SBP) reported that the entire amount was raised for a three-month tenor at 16.99 per cent while the bids for six- and 12-month bills were rejected. The total bids received were Rs845bn indicating that banks were keen to park their maximum liquidity in risk-free high-return government papers. The government is facing serious liquidity problems to finance ongoing and new development projects. The latest data released by the SBP showed that the government had been borrowing heavily as it raised Rs1,146.8 billion during the first five and half months of the current fiscal year against net debt retirement of Rs199bn in the same period of last year. The overall development spending of the government dropped 38pc to Rs130.64bn in July-November 2022-23 from Rs209.53bn a year ago to create a cushion for rising current expenditures.