Business

Govt to borrow record Rs11.1 trillion in FY24 first quarter

Published

10 months ago

Farwa

Govt to raise Rs8.70 trillion via short-term paper auctions.
PIBs to allow govt to borrow Rs1.68 tn from commercial banks.
Markup expenses budgeted at Rs7.3 trillion for FY24.

KARACHI: As the government grapples with a ballooning budget deficit and a sluggish economy, the central bank’s auction calendar shows it plans to borrow a record Rs11.1 trillion rupees through treasury bills and bonds in the July-September quarter, The News reported Friday.

Most planned borrowing for the first quarter of FY24 will be done through Market Treasury Bills with maturities of three, six, and 12 months.

According to the auction calendar issued by the central bank on Thursday, the government will raise Rs8.70 trillion via short-term paper auctions.

The sale of Pakistan Investment Bonds (PIBs) with fixed and floating rates will allow the government to borrow Rs1.68 trillion from commercial banks.

It will borrow Rs450 billion via variable rental rate and Rs270 billion via fixed rate government of Pakistan Ijara Sukuk.

During July-September FY24, T-bills and PIBs worth Rs9.6 trillion will mature.

According to the Ministry of Finance, the federal budget deficit increased by more than Rs3.5 trillion in the first nine months of the current fiscal year due to a sharp increase in spending on debt servicing and defence requirements, which accounted for two-thirds of all expenditures.

Markup expenses have been budgeted at Rs7.3 trillion for FY24, up 85% from a year earlier.

Markup expenses are expected to grow on the back of higher interest rates that have been increased to tame inflation, along with higher borrowings by the government to plug fiscal deficit.

Due to the government’s expanding demand for funding, public debt is accumulating more quickly, and the stalled International Monetary Fund (IMF) Extended Fund Facility (EEF) — which expired on June 30 — dried foreign currency inflows.

Moreover, given poor revenue and high expenditure demands, the government was forced to increase its domestic debt.

The federal government’s debt increased 32% year-on-year to Rs58.962 trillion at the end of May.

At the end of May, the domestic debt surged by 28% year-on-year to Rs37.1 trillion.

Domestic debt rose by 19.2% during the 11 months of FY2023.

Similarly, foreign debt increased sharply by 40% to Rs21.9 trillion in May, while it grew by 31% in FY2023.

Last week, the government reached a staff-level agreement with the IMF for a $3 billion standby arrangement.

The eight-month delay in the agreement, awaiting IMF board approval in July, gives Pakistan some relief as it struggles with a severe balance of payments crisis and declining foreign exchange reserves.

The IMF agreement has reduced the nation’s risk of a short-term default.

Business

Pakistan’s gold prices are still declining; see the most recent

Published

2 days ago

Farwa

The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

Business

Pakistan and the IMF begin talks for a new loan.

Published

2 days ago

Farwa

Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

Business

Petrol prices are likely to drop significantly beginning May 16.

Published

2 days ago

Farwa

According to sources, the government is set to decrease petrol prices by Rs 14 per litre and diesel prices by Rs 10 on May 16 for the next fortnight’s revision.

Last month, the government reduced the price of fuel and high-speed diesel by Rs5.45 and Rs8.42 per fortnight, respectively.

The current fuel price is Rs288.49 per litre, while the HSD price is Rs281.96.

Meanwhile, oil prices fell further on Monday, as signs of sluggish fuel consumption and comments from U.S. Federal Reserve officials dimmed optimism for interest rate reduction, which may slow growth and reduce fuel demand in the world’s largest economy.

Brent crude prices down 25 cents, or 0.3%, to $82.54 a barrel, while US West Texas Intermediate crude futures fell 19 cents, or 0.2%, to $78.07 per barrel.

Oil prices also declined on signals of poor demand, according to ANZ analysts, as gasoline and distillate inventories in the United States increased in the week before the start of the driving season.

Refiners throughout the world are dealing with falling diesel profitability as new refineries increase supply and warm weather in the northern hemisphere and weak economic activity reduce demand.