Govt. relies on borrowing from the Banking system – Alfalah Securities Limited

Karachi: The government has raised PkR 152 bn through the auction of Treasury Bills (T-bills) as it increased its borrowing from the banking system.

According to Alfalah Securities, SBP has stated that PkR 1 bn were invested in 3-month Tbills at cut-off yield 13.0697%, PkR 47 bn in 6-month T-bills at 13.32% and PkR 1 bn in the one year T-bills at 13.3124% which reflects the banks view on the discount rate which is due to be announced in the Monetary Policy Statement on October 8, 2011. However, Alfalah Securities expects the discount rate to be slashed down significantly by 100bps to 12.5% as the recent CPI inflation of 11.56% in August 2011 reported after changing the base year has provided room for SBP to cut the policy rate.

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