Govt exceeds auction target, borrows Rs2.3tr

The government raised Rs2.29 trillion through treasury bill auctions on Wednesday, surpassing the target, as well as the requirement for the maturity of the bills. The cash-starved government raised a total of Rs2.286tr, exceeding the target of Rs1.8tr. This amount also exceeded the required funds for the maturity of the treasury bills on the same day by 35 per cent. In fact, the government raised Rs596bn more than the required amount of Rs1.69tr for the maturity. The government has been actively borrowing to address the revenue shortfall. According to a recent report by the State Bank of Pakistan, the government borrowed Rs3.147tr from scheduled banks during the first 10-and-a-half months of the current fiscal year, FY23. The bidding trend also showed that banks are keen to invest in short-term three-month papers, anticipating a potential increase in interest rates in the upcoming weeks or months. The total bids from banks amounted to Rs3.060tr. This trend reflects the banks’ preference to invest a maximum portion of their funds in risk-free government papers rather than lending to the private sector. Consequently, lending to the private sector has declined to just 2pc during the first 10-and-a-half months of this fiscal year.