PKR 3.1 trillion borrowed in T-bill auction

Karachi: The federal government has borrowed a record PKR 3.1 trillion from commercial banks to finance the budget deficit – a news source reported.

This has been done because the revenue collection has remained short of the target so far in the current fiscal year.

Read: SBP to raise PKR 4.75 trillion to help with budget deficit

The government borrowed against the target of PKR 600 billion by the auction of treasury bills. The government borrowed for a duration of three months by selling three-month treasury bills to commercial banks at an increased rate of return after the central bank hiked the key interest rate by 1.5 percentage points to a eight-year high at 12.25%.

The budget deficit has hit an 11-year high at PKR 1.92 trillion, or 5% of the total size of national economy, for nine months ended March 2019. This happens due to a continued double-digit growth in defence and debt spending, and sinking revenues, according to the Ministry of Finance.