Government secures Rs16 billion in PIB auction, falls short of Rs350 billion target

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

According to the State Bank of Pakistan (SBP), bids for two- and three-year bonds were rejected during the auction.

The yields on five-year PIBs saw a slight decrease of one basis point to 12.3745 percent, while the yields on 10-year bonds remained unchanged at 12.79 percent.

Analysts observed that the funds generated from the PIB sales were markedly below the target due to higher bid amounts compared to the last auction.

This auction marked the first instance following the SBP’s unexpected decision to pause its easing cycle on Monday, maintaining the benchmark policy rate at 12 percent.

This decision stems from growing concerns regarding inflation risks, particularly those related to fluctuating food prices and increasing global tariffs.

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The SBP stated that the Monetary Policy Committee (MPC) had evaluated the risks associated with the volatility inherent in energy and food prices, which may affect the ongoing decline in inflation.

Core inflation has remained stubbornly high, indicating that any increases in food and energy costs could lead to a general rise in inflation levels.

The MPC noted the emergence of pressures on the external account resulting from rising imports amidst weakened financial inflows.

Ultimately, the MPC concluded that the current real interest rate is adequately positive on a forward-looking basis to support ongoing macroeconomic stability, as per the SBP’s statement.

Globally, uncertainty has intensified due to escalating tariffs, potentially impacting global economic growth, trade, and commodity prices. The consumer price index inflation rate for the country slowed to 1.5 percent in February, marking the lowest level in nearly a decade, compared to 2.4 percent in the preceding month.