The cash strapped government Wednesday continued to borrow from the banking system and collected over Rs177.277 billion through auctioning of Market Treasury Bills (MTBs) to cater its ever increasing budgetary expenditures. The Federal Ministry of Finance raised the fresh loan through the central bank which, from October 04 to 05, invited tenders from eleven primary dealers for the auction of MTBs of 3, 6 and 12 month maturity periods. The scheduled banks have long been under fire for their, what the critiques say, ‘risk-averse’ behavior towards the growth oriented private sector lending and prioritising the heavily weighted government securities including MTBs, Ijara Sukuk and Pakistan Investment Bonds. Wednesday saw the same tendency prevailing as the primary dealers, led by the commercial banks, came up with exorbitant bids of Rs463.147 billion face value. They offered Rs12.170 billion for 3-month, Rs132.655 billion for 6-month and Rs318.322 billion for the 12-month maturities. The central bank, however, accepted bids having a face value of Rs177.277 billion, Rs4.200 billion for 3-month, Rs64.155 billion for 6-month and Rs108.922 billion for 12-month MTBs. The funds starved government has previously been offering an attractively increased rate of return on the borrowed money to cater its pressing budgetary needs. But Wednesday’s auction saw the regulator setting the weighted average yields, respectively, at 12.6924, 12.7424 and 12.8091 per cent for the 3, 6 and 12 month papers. The offered cut off yields also remained below 13 per cent at 12.7472, 12.7783 and 12.8383 per cent for the MTBs.. According to State Bank data, by August this year the resource-constrained government’s budgetary loans from the primary dealers, including banks, mutual funds, insurance firms and other corporate entities, accumulated to over Rs3 trillion, with the scheduled banks’ share amounting to above 71 per cent or Rs2 trillion.
