KARACHI: The government on Wednesday raised Rs338 billion through auction of treasury bills against the target of Rs400bn.

The government has reduced dependence on commercial banks as it has been borrowing more from the State Bank of Pakistan throughout this fiscal year for budgetary support.

The fiscal deficit is expected to cross the projected target of 3.8 per cent for the current fiscal year.

During the May-July period, the government announced to borrow Rs2.65 trillion. The maturing amount is about Rs2.443tr during the three-month period indicating higher than required borrowing.

However, in the last two T-bill auctions the amount raised was less than the targets suggesting the government wanted to make the banking money available for the private sector which for the first time during the PML-N government tenure borrowed Rs519bn in the first 10 months of 2016-17 compared to Rs290bn in the same period of last year.The cut-off yields on the papers of all three tenures of three-, six- and 12-months were unchanged but the trend to invest in the shortest term remained intact.

The banks invested Rs251.4bn in the three-month indicating the uncertainty hovering over the interest rate scenario. The central bank in its latest monetary policy review kept its key lending rate unchanged at 5.75 per cent for the next two months.

The interest rate remained unchanged for a year. Since the inflation is inching up, experts see a change in the policy rate after budget.

The government raised Rs83.8bn for six-month and meagre Rs3bn in 12-month papers.

Published in Dawn, May 25th, 2017