Pakistan plans to borrow Rs6.75 trillion by May

The government of Pakistan plans to borrow Rs6.75 trillion from banks over the next three months. This will be done through treasury bills and bonds to cover its budget deficit and repay loans. To achieve this, the government intends to raise Rs3.65 trillion through Market Treasury bills, which will have maturities of three, six, and twelve months. Additionally, it aims to sell Pakistan Investment Bonds with maturities of two to fifteen years to borrow Rs3.1 trillion from commercial banks, according to the State Bank of Pakistan's auction calendar released on Monday. The total maturity amount for T-bills and PIBs is estimated at Rs3.872 trillion during this period. The government relies heavily on borrowing due to low tax revenues and weak financial inflows. Recently, the International Monetary Fund (IMF) completed its first review of a $7 billion bailout, although discussions on specific policies are ongoing. In its recent monetary policy statement, the State Bank of Pakistan reported improvements in the fiscal balance in the first half of FY25, fueled by increased revenues, especially from non-tax sources. However, the Federal Board of Revenue is still experiencing significant shortfalls in tax revenue. Meanwhile, Moody’s, a global rating agency, has upgraded Pakistan's banking outlook from stable to positive, reflecting improved financial performance. The report indicates that government securities account for 55% of banks' total assets, showing a strong link between banks' credit strength and the government's financial situation. Despite an increase in problem loans, overall loans represent only 23% of banks' assets, suggesting some stability in the banking sector.