The government of Pakistan has raised Rs. 4.65 billion from Islamic banks on the mode of Bia Muajjal transaction (deferred payment) to meet its budgetary deficit & expenses for development projects.
According to the details, State Bank of Pakistan (SBP) conducted an open market operation on Monday in which it purchased GOP Ijara (GIS-FRR-03) worth Rs. 4.65 billion on deferred payment (Bai-Muajjal) for 12 months.
The central bank received nine bids worth Rs. 22.4 billion for 365 days with quotes ranging between Rs. 109 billion to Rs. 113 billion for the same period however, it accepted only two bids worth Rs. 4.65 billion with a deferred price of 109.7940 billion.
SBP purchases GOP Ijara Sukuk (GIS) on a deferred payment basis (Bai-Muajjal) for a tenor of up to 1 year and sells GIS on a ready payment basis through a competitive bidding auction process. These provide SBP with a tool to manage excess liquidity available with Islamic Banks and improve the effectiveness of monetary policy transmission in the absence of regular Sukuk issuances by the GOP.
This is a win-win situation for the government and Islamic banking industry as this manages the extra liquidity/holding of the banks along with extra income in terms of profit and provides finances to the government to manage its expenses.
The government raised Rs. 2.8 billion last year in March the same way. It also issued Energy Sukuk of Rs. 200 billion in March last year.
However, it hasn’t issued GIS for the past two years. The government earlier planned to issue an amount of over Rs. 600 billion under Sukuk which has not been done yet.
