KARACHI: The government borrowed more than Rs1 trillion through auctions of treasury bonds and 10-year Pakistan Investment Bonds on Wednesday.
The State Bank of Pakistan reported that the government borrowed Rs979.3 billion through T-bills and Rs108bn through PIBs, raising a total of Rs1.087tr.
The cut-off yields on T-bills were slashed by up to 34 basis points. The market experts believe the State Bank may opt for another 50bps cut in its policy rate at the next monetary policy review, and the trimming of returns on T-bills reflects this possibility.
The liquidity of the banking market was evident from the huge bids of Rs2.5tr to buy T-bills. However, the government picked Rs979bn against the auction of Rs850bn.
The investors offered the highest bids for 12-month papers, reaching Rs1.374tr, and the government raised Rs720bn, also the highest amount for the tenor. The government raised Rs46.6bn for three-month tenor; Rs41.5bn for one-month and Rs14.75bn for six-month.
The cut-off yields were reduced by 29bps, 34bps, 32bps and 33bps for one-month, three-month, six-month and 12-month papers, respectively.
The government is raising debts, but the first five months of FY26 were significantly lower than the same period of the last fiscal year. However, the central government’s domestic debt increased remarkably during the last 12 months.
Domestic debt increased by Rs6.035tr to Rs54.619tr in November 2025, compared with Rs48.584tr in November 2024.
However, the government ‘s domestic debt increased by just Rs144bn in July-November FY26, which means the entire amount was raised in the second half of the previous fiscal year, FY25. This lesser amount raised in 5MFY26 was mainly due to Rs2.7tr liquidity supplied by the State Bank as profits. It may help the government to keep the fiscal deficit within the target in FY26.
It was also noted that the government’s domestic debt mainly increased due to long-term PIBs. The total increase in the borrowing through the PIBs during November 2024 to Nov 2025 was Rs5.4tr out of total increase of Rs6.035tr.
The government has been piling up long-term debt to avoid quick repayments. The amount is being raised through T-bills is kept below the maturity amount. The target for the T-bills auction on Wednesday was Rs850bn, and the maturity amount was Rs875bn.
Published in Dawn, January 8th, 2026
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