The government auctioned three 10-year Pakistan Investment Bonds (PIBs) to the commercial banks. The auction fetched Rs. 161 billion against the target of Rs. 125 billion.
The government raised this amount at a stable rate of return (cut-off yield). It received bids of Rs. 376 billion from the banks, which is three times the target amount that the government was looking to raise.
One of the reasons for these high bids is the 16 percent increase in bank deposits to Rs. 17.95 trillion in May 2021, resulting in high liquidity and low investment options.
The banks’ deposits have grown significantly during the pandemic as investors chose to keep their funds in banks instead of investing during the period. This, coupled with record growth in the receipt of workers’ remittances from overseas Pakistanis, has piled up growth in deposits.
The government has raised the financing despite no scheduled repayment of the previous debt against the PIBs in June. However, the data from the State Bank of Pakistan (SBP) shows that it is scheduled to repay a debt against the maturing PIBs worth Rs. 961 billion in July 2021.
Previously, the government had raised Rs. 153.8 billion from three-year PIBs at a cut-off yield of 8.69 percent; Rs. 7 billion from five-year PIBs at a cut-off yield of 9.20 percent; and Rs. 99 million from 10-year PIBs at a cut-off yield of 9.83 percent.
All the cut-off yields are the same as they were in the last auction that was held in May.
The SBP data also shows Pakistan’s total debt and liabilities at Rs. 45.47 trillion as of March 2021, as compared to Rs. 42.96 trillion in March 2020.