KARACHI: The government has planned to borrow Rs5.6 trillion from banks in August-October, reflecting the severity of the liquidity despite projecting an ambitious revenue collection target for the current fiscal year.

The SBP has uploaded the government’s plan to raise Rs5.59tr through auctions of Treasury Bills and Pakistan Investment Bonds during the three months.

The government will raise Rs3.435tr by auctioning T-bills and Rs2.16tr from PIBs. The government’s debts have alarmingly increased during the last five years, eating up most of the revenue generated in the economy.

The government has earmarked Rs9.775tr for interest and loan repayments, which accounts for 51.78 per cent of the Rs18.877tr budget outlay for 2024-25.

In FY24, the government borrowed a record Rs8.5tr from banks, and it practically crowded out the private sector, hampering economic growth.

The government will borrow Rs1.12tr for 5-year PIBs and Rs1.04tr for 10-year PIBs from August to October. The auction calendar further showed that the borrowing will reach the highest on Oct 16 as the government will sell Rs800bn T-bills. In the next auction on Oct 30, the government will raise Rs750bn, which means the government will raise Rs1,550bn in just 15 days.

According to the current fiscal year’s budget, the allocation for debt servicing includes Rs1.038tr for foreign debt and Rs8.736tr for domestic debt.

Published in Dawn, August 25th, 2024