Finance Minister Collaborating with SECP to Outsource Government Loans

The Finance Minister and the Securities and Exchange Commission of Pakistan (SECP) are reportedly collaborating on a plan to outsource government loans at lower rates than those provided by banks. This revealed by the Secretary of Finance during a recent meeting of the Public Procurement Regulatory Authority (PPRA) in which a proposal from the Finance Division regarding exemption from the applicability of Rule 12 of Public Procurement Rules, 2004 discussed.

The Managing Director of PPRA informed the board that the Finance Division had requested authorities to allow an exemption from the applicability of Rule 12 of Public Procurement Rules, 2004, which could enable direct credit lines from financial institutions to meet the country’s financial requirements.

The Secretary of Finance further explained that, in terms of Article 166 of the Constitution of Pakistan and the Rules of Business 1973. The government is authorized to raise domestic debt through domestic government banks, loans, or any other domestic borrowing instruments other than those issued by the central directorate of National Savings. The government is expecting significant issues with its cash balance due to increased deficit financing.

The existing steps for financing rely on banks raising domestic rent, but with recent changes in market dynamics, such as the increase in the policy rate by the State Bank of Pakistan (SBP) and imposition of ADR-related tax, banks are reluctant to participate through sales. Options of raising debt from SBP are also restricted due to recent changes to the SBP Act. As a result, exploring different fund routes through direct credit lines from both Islamic and Conventional banks has become necessary to fulfill government funds needs.

The Secretary of Finance advised members that direct credit lines from financial institutions require the government to follow the Public Procurement Rules, 2004, to look for bids from institutions. However, in the current situation, financing taken an emergency basis, and hence normal procurement processes cannot be follow. Moreover, issuing advertisements in local and international press for lifting such financing bills will result in a further decline in market perception. Therefore, the Finance Division needs special treatment from the applicability of Rule 12 of Public Procurement Rules, 2004, to explore such commercial financing from domestic institutions.

The Secretary of Finance emphasized that this is an emergency measure and is not going to be a regular exercise. The MP PPRA invited the Chairman of the PPRA Board to the office of the Secretary of Finance to further brief board members on the plan.

Syeda Qandeel Zehra
Syeda Qandeel Zehra
Syeda Qandeel Zehra is a senior content writer with writing expertise in different niches. She is an MBA graduate by qualification and loves to write about diverse topics. Zehra has 3 years of writing experience and currently employed at as a content writer.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisment -

Most Popular