KARACHI: The government on Wednesday could only raise Rs26.4 billion through the Pakistan Investment Bonds (PIBs) against the target of Rs100bn, as investors sought higher returns.

The State Bank’s data showed that the government accepted the highest amount of Rs25 billion for three-year PIBs while it accepted only Rs75 million for the five-year tenor. The bids for the benchmark 10-year PIBs were the highest, at Rs122.8bn.

A PIB is a certificate representing a loan to the federal government that matures in three, five, 10, 15, 20 or 30 years. In contrast, the short-term Treasury bill matures in three, six or 12 months. Because these certificates carry the full backing of the government, they are viewed as the safest investment.

In Wednesday’s PIBs auction, bids for the 10-year tenor were rejected, whereas no bids were offered for 15, 20 and 30 years.

The three-year tenor was sold at a cut-off yield of 18.05 per cent and the five-year tenor at 13.8pc.

The government has made massive borrowing through PIBs over the past year, and it may find it challenging to repay such a huge amount with interest amid a high policy rate.

From January 2022 to January 2023, the government borrowed Rs5.318 trillion through PIBs. Total borrowings by the end of January amounted to Rs20.9tr against Rs15.59tr by the end of the same month a year ago.

Rupee falls

The currency market remained dull both in the interbank and open markets.

The closing price of dollar as reported by the State Bank of Pakistan on Wednesday was Rs282.85, showing a depreciation of 56 paise.

The exchange companies who traded dollar with the banks quoted the interbank dollar price as Rs284.8 while the open market rate was Rs285.5.

Published in Dawn, March 16th, 2023