KARACHI: The government raised Rs427 billion by auctioning Pakistan Investment Bonds (PIBs) on Wednesday, exceeding the Rs350bn target.
The government raised Rs77bn more, reflecting the increasing need for government spending. The banks were also found to be over-liquid as they were willing to invest Rs887bn in the PIBs.
Interestingly, the government raised the highest amount of Rs287.6bn for 10 years while the most bids amounting to Rs305bn were for 5-year bonds.
Financial experts stated that the bids reflect the banks’ liquidity, while the government’s preference indicates its strategy to raise debts for a longer period. It was also reflected in the last several auctions of the treasury bills when the government raised less than the maturity amount.
The government is accumulating long-term debt to avoid liquidity shortages.
Another report from the State Bank shows that during the first eight months of the current fiscal year FY25, the long-term PIBs increased by Rs4.5 trillion.
The amount of PIBs raised by the government during the 8 months has increased to Rs32.5tr in February from Rs28tr in June 2024.
The government raised Rs37bn for 2 years, Rs38bn for 3 years, Rs93.2bn for 5 years, and Rs247.6bn for 10 years. The long-term investment reflects growing confidence in falling inflation and interest rate stability.
The State Bank has slashed its policy rate by 1,000 basis points to 12 per cent from an unprecedented level of 22pc in June 2024.
The steep deceleration in the main inflation may compel the SBP to cut the rate again.
Published in Dawn, April 10th, 2025