Govt generates Rs705bn through auction of treasury bills
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Loading... - Darshan Trivedi
- 04 May 2023
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The government succeeded in raising Rs705 billion through an auction of market treasury bills despite Rs1.195 trillion bids offered mostly by banks on Wednesday.
The banks having surplus liquid cash took part in bidding that showed their willingness to invest in the government bills. The government was close to its target of Rs750 billion but the accepted amount was much higher than the maturing amount of Rs630 billion.
The revenue shortfall during the first 10 months of the current fiscal was estimated at Rs381 billion. Despite that, the cash-starved government borrowed around Rs3 trillion from commercial banks.
According to economists bank deposits increased as private sector abstained from taking loans at an exorbitant interest rate. The State Bank’s policy rate is 21pc but the clients could get money at much higher rates from banks.
The bank advances to the private sector dropped by 81 percent during the current fiscal year indicating the poor health of economy. The IMF and WB has already reduced GDP growth to 0.5pc this fiscal.
On the other hand, bankers claimed there were two obvious reasons for this extremely low lending to the private sector – unprecedented inflation of 36pc and banks unwillingness to lend money amid a highly uncertain economic and political situation in the country.
This prolonged uncertainty devalued the local currency by 54pc in a year and the bankers said the high inflation with continued devaluation has left no option for the banks but to invest in the risk-free government papers. Read More…
