Pakistan targets Rs 5.2 trillion in treasury bill and bond sales amid growing foreign outflows

KARACHI: Pakistan is set to raise Rs5.254 trillion through the issuance of treasury bills and investment bonds in the first quarter of 2025, as reported by the State Bank of Pakistan (SBP). The SBP’s plan includes six auctions for T-Bills, with a target of Rs2.2 trillion. Notably, the maturing T-Bills during this period total Rs3.45 trillion.

In addition, the government plans to conduct three auctions for fixed rate Pakistan Investment Bonds (PIBs) with a target of Rs1.05 trillion, while maturing PIBs for the current quarter amount to Rs70 billion. Furthermore, the government is also intending to raise Rs2.0 trillion through six auctions of floating rate PIBs.

Foreign investors have significantly reduced their holdings in Pakistan’s T-Bills, withdrawing 64 percent of their investments, equating to $550.6 million in the first five months of FY25.

Analysts attribute this decline to decreasing interest rates, as T-Bill yields have fallen sharply following a 900 basis point reduction in the policy rate since June. Contributing factors such as political instability and more attractive investment options abroad have also dissuaded foreign inflows, which reached net zero in early December.

While some inflows originated from countries like the UK ($596.6 million), UAE ($85 million), Australia ($52 million), and Bahrain ($50 million), these were counterbalanced by considerable outflows. Experts caution that foreign investments in T-Bills may continue to decline in the upcoming months.