KARACHI: The government increased the cut-off yields to raise Rs852 billion through auctions of treasury bills on Wednesday against the target of Rs650bn.

The State Bank reported that the three-month cut-off yield was increased by 94 basis points to 17.937 per cent. All the bids for six-month and 12-month tenors were rejected.

The central bank received a total of Rs1,593bn bids suggesting that the banks were willing to park their maximum liquidity in government papers. This was the first auction after SBP raised its policy rate by 100bps 25-year high of 17pc.

The government has been borrowing costly money and will have to pay back huge sums in interest payments which will further reduce development spending.

Published in Dawn, January 26th, 2023