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Government raised Rs512 billion by treasury bills

Karachi: The government raised Rs512 billion on Wednesday by auctioning treasury bills taking its total borrowing from private banks to over Rs1 trillion in the last 15 days.

In the last T-bills auction held on November 27 the banks bought Rs541bn three-month government papers.

The SBP reported on Wednesday that banks showed interest in short-term three-month papers while bids for other tenure were negligible reflecting their approach towards interest rate.

Since the November inflation climbed to double digits, bankers believe the policy interest rate is bound to increase in the next monetary policy. Also, the government is under pressure of lenders to increase the interest rate for further tightening of monetary expansion and to control the rising trend of inflation.

Their approach towards possibility of increase in the interest rate looks positive as cut-off yield on 3-months bills were raised by 5 basis points to 9.91 per cent. Currently the interest rate is 10pc.

For the last five years, the banks have been banking with the government by investing their 87pc liquidity in to the government papers.

The balance sheet of the State Bank showed the government borrowed over Rs800bn in third week of November which fell to Rs558bn in the end of November.

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