The State Bank of Pakistan (SBP) has announced plans to raise approximately PKR 6,300 billion ($22.5 billion) from February to April through auction of government papers to meet domestic borrowing needs and address the fiscal deficit.
The auction plan includes a target of nearly PKR 3,200 billion for treasury bills and PKR 1,050 billion for fixed rate Pakistan Investment Bonds (PIBs) and PKR 2,050 for floating rate PIBs.
The maturity amount of T-Bills during this period is around PKR 3,082 billion, and PKR 70 billion for fixed PIBs.
Treasury bills and Pakistan Investment Bonds have seen substantial declines in cut-off yields over the period.
In the last T-Bill auction, the three-month treasury bills yield stood at 11.76%, six-month bills at 11.5%, and one-year bills to 11.59%.
In February 2025, headline inflation fell to a 112-month low of 2.2% year-on-year (YoY), down from 2.4% in the previous month. Monthly inflation is expected to decrease slightly by 0.21%, marking the lowest reading since October 2015 when it was at 1.61%.
For the first eight months of fiscal year 2025 (8MFY25), average inflation is estimated at 6.04%, a significant drop from the 28.0% recorded in 8MFY24. If global commodity and energy prices remain stable, and the Pakistani Rupee (PKR) holds steady, it will further support the inflation outlook, keeping price pressures contained.
It is worth noting that policy rates have declined from a high of 22% in June last year to 12%. Analysts expect the State Bank of Pakistan (SBP) to continue its rate-cutting cycle with another 50 basis points (bps) reduction in the upcoming monetary policy review on March 10, 2025, bringing the policy rate to 11.5%.
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