The State Bank of Pakistan (SBP) has released its auction schedule for Pakistan Investment Bonds (PIBs) and Market Treasury Bills (MTBs), aiming to raise Rs6.8 trillion in upcoming auctions.
The Domestic Markets & Monetary Management Department published the calendar, detailing the planned issuance of both fixed-rate and floating-rate PIBs, along with short-term MTBs.
As per SBP data, the central bank intends to generate Rs2,900 billion through MTB auctions and Rs3,925 billion via PIBs—comprising Rs1,050 billion from fixed-rate PIBs and Rs2,875 billion from floating-rate PIBs. These auctions will be conducted between February and April 2025, covering various maturities. Meanwhile, bond maturities during this period total Rs3,092 billion.
Economists believe that the SBP’s decision to raise Rs6.8 trillion in just three months reflects a significant fiscal deficit, underscoring the government’s need to cover the shortfall between revenue and spending.
An increased borrowing requirement often results in higher interest rates, making it challenging for the SBP to lower the policy rate, which currently stands at 12%—one of the highest globally. Excessive borrowing from commercial banks or the SBP itself could also expand the money supply, potentially driving inflation upward. The SBP has cautioned that while inflation has been declining, it may pick up again from June 2024.
Heavy government borrowing may also reduce the availability of funds for private sector lending, restricting business growth and slowing private investment, which could negatively impact economic expansion.
A growing dependence on PIBs and MTBs adds to Pakistan’s domestic debt burden. If revenue collection remains weak, higher debt repayments could lead to long-term fiscal challenges.
