State Bank buys back Rs309.5 billion PIBs in second auction to inject liquidity

The State Bank of Pakistan (SBP) has repurchased Pakistan Investment Bonds (PIBs) worth Rs309.5 billion in its second buyback auction within four days, providing liquidity to investors and supporting the domestic debt market.

The central bank accepted the full volume of bids in the auction for five-year floating-rate bonds maturing on May 6, 2026.

Earlier, a similar buyback conducted on April 20 saw the repurchase of Rs285.3 billion worth of bonds, taking the total buyback over the two auctions to Rs594.8 billion.

Buyback auctions allow the central bank to repurchase government securities before maturity, helping manage liquidity and reduce the burden of high-cost debt. The mechanism also enables investors to exit holdings through competitive bidding and redeploy funds into new instruments.

Pakistan’s domestic debt has continued to rise, reaching Rs56.679 trillion by the end of February 2026, an increase of Rs2.2 trillion during the first eight months of the fiscal year. Over a 12-month period, domestic debt grew by Rs5.657 trillion.

Pakistan Investment Bonds account for Rs35.362 trillion, or 62% of total domestic debt, reflecting the government’s reliance on long-term borrowing instruments.

The government plans to raise Rs1.35 trillion through PIB auctions between April 28 and June 10, against maturities of Rs158 billion during the same period. It also aims to mobilise an additional Rs350 billion through semi-annual bond auctions.

At the same time, borrowing from banks has increased, while development spending has been reduced. The federal government recently cut Rs172.8 billion from the development budget for FY2025-26, bringing it down to Rs837.16 billion.

Officials said higher expenditure pressures have limited fiscal space, with economic growth remaining around 3% against a target of 3.5% for the current fiscal year.