SBP plans to raise Rs6.8 trillion through bond, treasury bill auctions

The State Bank of Pakistan (SBP) has unveiled its auction calendar for Pakistan Investment Bonds (PIBs) and Market Treasury Bills (MTBs), targeting Rs6.8 trillion in fundraising over the next three months. 

The schedule, released by the Domestic Markets & Monetary Management Department, outlines upcoming auctions for fixed-rate and floating-rate PIBs as well as short-term MTBs from February to April 2025.

According to SBP data, the central bank aims to raise Rs2,900 billion through MTB auctions and Rs3,925 billion through PIBs, which includes Rs1,050 billion from fixed-rate bonds and Rs2,875 billion from floating-rate securities. Meanwhile, bond maturities during this period stand at Rs3,092 billion.

The SBP has indicated that while inflation is declining, it may experience an upward trend from June 2024 due to factors including monetary expansion from government borrowing.

Economists suggest that the large-scale borrowing signals a significant fiscal deficit, as the government seeks funds to cover revenue shortfalls and expenditures. 

They warn that excessive borrowing could put upward pressure on interest rates, potentially complicating the SBP’s efforts to lower the policy rate, which currently stands at 12%—among the highest globally.

Analysts also caution that a higher reliance on PIBs and MTBs may restrict liquidity for the private sector, limiting business expansion and investment, ultimately slowing economic growth. 

Additionally, growing domestic debt obligations could lead to higher repayment costs and long-term fiscal instability.