ISLAMABAD: The government has announced that it has come up with the solution of investing the idle ‘dam fund’ money in treasury bills, in response to reports that it was losing about Rs10 million a day on the fund.
The Supreme Court of Pakistan and the Prime Minister of Pakistan Diamer-Bhasha and Mohmand Dams Fund has raised Rs10.7 billion as of June 13.
However, the Supreme Court of Pakistan was told on Tuesday that it was losing approximately Rs10 million a day as interest by not investing the money collected so far, a private television channel reported Thursday.
By Thursday, the government said it was investing the money in treasury bills which would add Rs3.6 million in daily profit to the fund over the next week.
The fund’s money has been transferred to the National Bank of Pakistan, which will invest it in the treasury bills (T-Bills).
T-Bills are issued by the government of Pakistan and sold through the State Bank of Pakistan via an auction.
The next auction of T-Bills will take place on June 19. The NBP can purchase T-Bills from those already in possession of T-Bills for one week, from June 14 to June 20. The annual interest rate for this investment is 12.6%, which translates into a profit of Rs26 million for the week or duration of the investment.
The Supreme Court of Pakistan took the initiative to create the ‘dam fund’ in July 2018. Two months later, the PM backed it because the country is facing a water emergency.
A chart of the funds collected for the Mohmand and Diamer-Bhasha dams so far. Photo: supremecourt.gov.pk
Pakistan is close to becoming a water-scarce country. It may run dry by 2025, according to the Pakistan Council of Research in Water Resources. This means that if we don’t conserve water, we may have a drought. There will not be enough water to drink, let alone grow crops and make products in factories.
After the PM’s call for donations, #DamsForPakistan, #DonateForDams, #DamFund started trending on Twitter with people sharing tips on how to donate. Some people even posted evidence of their contributions, asking others to do their “national duty”. The PM in his address to the overseas Pakistanis said he expected each of them to donate at least 1,000 dollars. The donations soared from less than Rs2 billion to nearly Rs5 billion in a month’s time but the momentum slowed down after that.
The government needs Rs1,450 billion to build these two dams and has so far been able to raise only Rs10.7 billion in one year. Even that money was lying idle in the coffers of the State Bank of Pakistan until critics pointed it out. The government’s decision to invest in T-Bills will keep adding Rs3.6 million per day to it at the given rate. The new rate will be announced in the next auction and that’s when the funds can be used to buy T-Bills from the primary market for longer duration.—NNI