Staff Report
ISLAMABAD: The Finance Ministry is working on a plan in collaboration with the Securities and Exchange Commission of Pakistan (SECP) to outsource government borrowing to get cash from the public at less rates than banks which are lending public money at inordinate rates.
This was revealed by Secretary Finance at Public Procurement Regulatory Authority’s (PPRA) recent meeting when a proposal of Finance Division regarding exemption from applicability of Rule no. 12 of Public Procurement Rules, 2004 was discussed.
Finance Division’s request
MD PPRA told the Board that Finance Division has requested the Authority to allow exemption from applicability of the mentioned rule, so that Finance Division may have direct credit lines from Financial Institutions and banks to meet economic needs of the country.
MD PPRA invited PPRA Board Chairman in his capacity as Finance Secretary to further brief the Board on the agenda. Secretary Finance apprised that in terms of the Constitution’s Article 166 of and Rules of Business 1973, it has the authority to increase domestic debt through internal government securities, bank loans or any other domestic borrowing resources, other than those issued by the Central Directorate of National Savings.
The government is facing significant issues on its cash balances because of high deficit financing. The existing procedure depends upon banks’ participation to increase domestic borrowings.
But due to recent changes in market dynamics, including increase in policy rate by the central bank and imposition of advances to Deposit Ratio related tax, banks are reluctantly participating through the practice of auctions.
