July 3, 2021
KARACHI: The government has targeted a borrowing of Rs5.725 trillion from domestic market by selling debt securities in first quarter of FY2022 to finance budget deficit, central bank’s auction calendar showed on Friday.
Between July and September, the government will raise Rs4.750 trillion from the auctions of Market Treasury Bills (MTBs), while it also aims to draw Rs975 billion through the sale of Pakistan Investment Bonds (PIBs).
The State Bank of Pakistan (SBP) would sell Rs450 billion worth of three-, five- 10-, 15-, 20-, and 30-year fixed-rate PIBs and Rs210 billion worth of five, and Rs210 billion worth of three-year floating rate PIBs. It would also auction Rs105 billion worth of a two-year floating rate PIB. The latest auction calendar shows the government wants to attract more funds from PIBs sales but it has not increased the targeted amount to be generated through the auctions of T-bills.
The long-term domestic bonds PIBs remained attractive for foreign investors as the returns were much higher than the investments in government bonds internationally. AFP/File
KARACHI: Foreign investment in Pakistan Investment Bonds (PIBs) witnessed a cumulative net inflow of $256 million during the outgoing financial year as opposed to the trend in Treasury bills (T-bills) and equities.
The State Bank of Pakistan’s (SBP) latest data issued on Wednesday revealed that the inflows in equities and T-bills were less than the outflows resulting into negative figures for the two segments.
The long-term domestic bonds PIBs remained attractive for foreign investors as the returns were much higher than the investments in government bonds internationally. Ten-year PIBs offered 9.84 per cent return in the auction held on June 9.
The assets of the Punjab Pension Fund (PPF) are estimated to grow to Rs84.7 billion at the end of the present fiscal year of 2020-21. The government, according to the provincial budget documents, has contributed Rs38.1bn into the fund in 13 years while the remaining Rs46.6bn has been earned through its investments.
The budget documents show the fund has earned a ‘reasonable’ real rate of return of 4.26 per cent per annum since its inception in 2008-09, illustrating the success of its investment strategy. “The investment strategy followed (by the PPF) over the years has worked well. The Pension Fund continues to earn an attractive real rate of return because of its high yielding portfolio of federal government debt like Pakistan Investment Bonds, Term Finance Certificates and National Saving Schemes. The fund’s equity portfolio has also posted a healthy return of 28.8pc during the outgoing financial year,” the documents say.
The govt sought NA's authorisation to borrow Rs26.3tr in the next fiscal year to repay and service loans, which was 81% higher compared to the original demand.
Foreigners buy debt worth $925mln in FY21 thenews.com.pk - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from thenews.com.pk Daily Mail and Mail on Sunday newspapers.