Govt raises Rs16bn via PIB sale

KARACHI: The government raised Rs16 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs) on Wednesday, falling short of its target of Rs350 billion.

According to the results released by the State Bank of Pakistan (SBP), the government rejected bids for two- and three-year bonds. The yields on five-year PIBs decreased by one basis point to 12.3745 per cent, while the yields on the 10-year bonds remained unchanged at 12.79 per cent. Analysts noted that the amount raised from the sale of PIBs was significantly below the target due to higher bids in comparison to the last auction.

This auction was the first one held after the SBP unexpectedly paused its easing cycle on Monday, keeping the benchmark policy rate at 12 per cent amid concerns about inflation risks stemming from fluctuating food prices and increasing global tariffs. In a statement, the SBP said that the Monetary Policy Committee (MPC) had assessed the risks associated with the inherent volatility of energy and food prices, which could impact the current downward trend in inflation. Core inflation has also proven to be more persistent at elevated levels, suggesting that any increase in food and energy prices may lead to a rise in overall inflation.

“The MPC viewed that some pressures on the external account have emerged due to rising imports amidst weak financial inflows. On balance, the MPC assessed the current real interest rate to be adequately positive on a forward-looking basis to sustain the ongoing macroeconomic stability,” the SBP said.

“On the global front, uncertainty has increased significantly amidst the ongoing tariff escalations, which may have implications for global economic growth, trade, and commodity prices,” it added. The country’s consumer price index inflation rate slowed to 1.5 per cent in February, the lowest level in nearly a decade, from 2.4 per cent in the previous month.