March 16, 2023 (MLN): The government's recent auction of Pakistan Investment Bonds (PIBs) fell short of its target of raising Rs100 billion and raised only Rs26.4bn, as investors demanded higher returns.
According to data from the State Bank of Pakistan (SBP), bids for the benchmark 10-year PIBs were high at Rs122.8bn, but the government only managed to accept bids for a total of Rs26.4bn while the 3-year PIBs received the highest amount of accepted bids at Rs25bn. However, bids worth Rs75 million were received for the 5-year tenor.
Meanwhile, bids for the 10-year tenor were rejected, and no bids were received for the 15, 20, and 30-year tenors.
It is important to note that the government has relied heavily on PIBs to borrow funds over the past year, with borrowing amounting to Rs5.318 trillion from January 2022 to January 2023.
However, it may face challenges in repaying such a significant amount with interest, given the high policy rate.
By the end of January, the total borrowing had reached Rs20.9tr, compared to Rs15.59tr at the end of January last year.
The low turnout of investors in the recent PIBs auction highlighted the increasing concerns over the government's ability to meet its debt obligations.
The government may need to reconsider its borrowing strategies to attract more investors and reduce its debt burden.
