Latest news with #PIBs
Business Recorder
08-07-2025
- Business
- Business Recorder
Domestic banking sector: Pakistan govt sets Rs5.75trn borrowing target for Q1
KARACHI: The federal government has set a borrowing target of Rs 5.575 trillion from the domestic banking sector through the sale of government securities during the first quarter of the current fiscal year (FY26) to finance the fiscal deficit. This target represents a 40 percent increase compared to the first quarter of FY25, when the borrowing goal was set at Rs 3.970 trillion. The State Bank of Pakistan (SBP) on Monday issued calendars for the auction of Pakistan Investment Bonds (PIBs) and Government of Pakistan Market Treasury Bills (MTBs) for July-September period of this fiscal year. Securities' auction procedures: SBP unveils changes The government is intended to meet the major financing requirements through sale of short-term government security papers-MTBs. The federal government has planned to raise some Rs 2.4 trillion through sale of PIBs during the first quarter of this fiscal year. Some Rs 1 trillion will be borrowed through sale of PIB (Fixed Rate), Rs 1.4 trillion through PIB (Floating Rate) Semi-Annual auction. Auctions for PIB (Fixed Rate) will be held on July 16 and August 1, 2025 with a targeted borrowing of Rs 300 billion for each auction, while another Rs 400 billion will be raised in September 2025. In addition, some six auctions of PIB (Floating Rate) will be held during the first quarter of FY26 to achieve the borrowing target of Rs 1.4 trillion. The federal government also intends to raise Rs 3.175 trillion through sale of short-term government security papers during July-Sep of FY26. Overall, some 6 auctions of T-Bills to be conducted to meet the financing target. First auction of MTBs will be held on July 9, 2025 with a tentative target of Rs 1.35 trillion. Economists said the less than revenue collection has compelled the government to borrow more from the domestic resources to finance the fiscal deficit. They said that massive borrowing resulted in over Rs 8 trillion interest payments in this fiscal year. Copyright Business Recorder, 2025
Business Recorder
08-07-2025
- Business
- Business Recorder
Domestic banking sector: Govt sets Rs5.75trn borrowing target for Q1
KARACHI: The federal government has set a borrowing target of Rs 5.575 trillion from the domestic banking sector through the sale of government securities during the first quarter of the current fiscal year (FY26) to finance the fiscal deficit. This target represents a 40 percent increase compared to the first quarter of FY25, when the borrowing goal was set at Rs 3.970 trillion. The State Bank of Pakistan (SBP) on Monday issued calendars for the auction of Pakistan Investment Bonds (PIBs) and Government of Pakistan Market Treasury Bills (MTBs) for July-September period of this fiscal year. Securities' auction procedures: SBP unveils changes The government is intended to meet the major financing requirements through sale of short-term government security papers-MTBs. The federal government has planned to raise some Rs 2.4 trillion through sale of PIBs during the first quarter of this fiscal year. Some Rs 1 trillion will be borrowed through sale of PIB (Fixed Rate), Rs 1.4 trillion through PIB (Floating Rate) Semi-Annual auction. Auctions for PIB (Fixed Rate) will be held on July 16 and August 1, 2025 with a targeted borrowing of Rs 300 billion for each auction, while another Rs 400 billion will be raised in September 2025. In addition, some six auctions of PIB (Floating Rate) will be held during the first quarter of FY26 to achieve the borrowing target of Rs 1.4 trillion. The federal government also intends to raise Rs 3.175 trillion through sale of short-term government security papers during July-Sep of FY26. Overall, some 6 auctions of T-Bills to be conducted to meet the financing target. First auction of MTBs will be held on July 9, 2025 with a tentative target of Rs 1.35 trillion. Economists said the less than revenue collection has compelled the government to borrow more from the domestic resources to finance the fiscal deficit. They said that massive borrowing resulted in over Rs 8 trillion interest payments in this fiscal year. Copyright Business Recorder, 2025
Express Tribune
22-06-2025
- Business
- Express Tribune
PSX posts fourth weekly decline
Shares of 366 companies were traded. At the end of the day, 182 stocks closed higher. PHOTO: AFP/FILE Listen to article Pakistan Stock Exchange (PSX) extended its bearish run in the outgoing week, which was the fourth consecutive weekly decline, as escalating geopolitical tensions following Israeli airstrikes on Iran, surging global commodity prices and weak regional markets dented investor sentiment. The benchmark KSE-100 index lost 2,120 points, or 1.74% week-on-week (WoW), to close at 120,023, slipping below key technical levels after touching the intra-week low of 119,770. Average daily trading volumes contracted 9.4% to 822 million shares, reflecting cautious participation amid macroeconomic uncertainty and rising oil prices, which hit a five-month high at $77 per barrel. On a day-on-day basis, the PSX on Monday remained range bound and registered thin gains of 82 points as investors treaded cautiously ahead of monetary policy announcement later in the day, where the central bank left policy rate unchanged at 11%. Despite the conflict between Israel and Iran, the benchmark KSE-100 index recorded a slight rise of 0.07% and settled at 122,225. On Tuesday, the market witnessed a volatile trading session, mirroring global market trends amid escalation in geopolitical tensions in the Middle East. The index swung between a high of 666 points and low of 409 points, before closing down by 254 points. On Wednesday, the bourse dived over 1,500 points as it came under pressure in the wake of heightened Israel-Iran conflict and unease over Pakistan's weak economic indicators. The KSE-100 recorded a sharp drop of 1,505 points at 120,466. The PSX extended the downward trend on Thursday and ended lower by 463 points to settle at 120,003, following a volatile session as early gains, driven by policy optimism, were wiped out by selling pressure amid Middle East tensions. The market ended the week by closing flat on Friday as investors remained cautious amid uncertainty about the Israel-Iran conflict. Although the index touched the intra-day high of 120,829, it closed with a slight rise of 21 points. In its report, AKD wrote that the market maintained a bearish momentum during the week as geopolitical concerns continued to weigh on investor confidence. The benchmark KSE-100 index closed the week at 120,023, down 2,120 points, or 1.74% WoW. The week began with the monetary policy committee maintaining the status quo on Monday, aligning with market expectations. Several macroeconomic indicators were released during the week, including a current account deficit of $103 million for May 2025 and net foreign direct investment of $194 million for the month. Additionally, the State Bank's auctions saw a reduction in Pakistan Investment Bonds' (PIBs) cut-off yields in contrast to an increase in T-bills' yields. Furthermore, the State Bank-held forex reserves rose $46 million, ending the week at $11.7 billion as of June 6. In the currency market, the Pakistani rupee depreciated 0.26% WoW against the greenback, closing at 283.7/$. Syed Danyal Hussain of JS Global noted that following the spike in commodity prices and a decline in Asian markets due to geopolitical tensions in the Middle East, the KSE-100 index dropped 3.5% (4,330 points) from its recent high seen last week. On a WoW basis, the index was down 1.7%, with average volumes falling 9.4% to 822 million shares. Brent oil prices continued to climb up to $77 per barrel, hitting a five-month high, on supply-side fears. Accordingly, the SBP opted to maintain policy rate at 11% in its monetary policy meeting held earlier in the week, he said. Moreover, the current account recorded a deficit of $103 million, however, the 11MFY25 figure remained comfortable with a surplus of $1.8 billion. Notably, exports fell 19% YoY while imports were up 9% YoY in May 2025. The analyst pointed out that Pakistan secured a syndicated loan of $1 billion from a foreign commercial bank and arrangements were also underway to secure a refinancing of $1.3 billion from Chinese banks by the end of June 30. In other news, the government raised Rs557 billion in the PIB auction against the target of Rs300 billion, with yields falling 29 to 64 basis points. Lastly, he added, June 19 was the final date for the submission of Expressions of Interest for PIA's acquisition, where five bids were received by the Privatisation Commission.
Express Tribune
14-06-2025
- Business
- Express Tribune
Govt borrowing crowds out private sector
Over half of the fresh borrowing in the education sector was done by the higher education sector. PHOTO: FILE Listen to article The Pakistan Economic Survey 2024-25 has highlighted a persistent structural imbalance in the country's banking sector, where lending to the government continues to dominate over credit disbursement to the private sector. Commercial banks have largely preferred investing in risk-free government securities, such as treasury bills and Pakistan Investment Bonds (PIBs), which offer secure and high returns, especially given the elevated interest rate environment that prevailed for most of FY24. The policy rate remained at a record high of 21% during much of the year as part of State Bank of Pakistan's (SBP) efforts to curb inflation. This made government securities particularly attractive to banks, leading to a further rise in their share within banks' asset portfolios. In terms of domestic debt, the government relied mostly on long-term borrowing through PIBs and Sukuk for financing the fiscal deficit. During the period, Rs2.4 trillion worth of treasury bills were retired. The government also introduced a new two-year, zero-coupon bond through which Rs610 billion was raised. These measures helped improve the maturity profile, reflected by the extension of the average time to maturity of the domestic debt from 2.9 to 3.5 years, according to the survey. "Regarding the auction of domestic debt securities, robust market participation was witnessed," said the report. Total bids received for treasury bills were Rs28.230 trillion (acceptance of Rs9.473 trillion), PIBs Rs23.540 trillion (acceptance of Rs9.682 trillion) and Sukuk Rs4.889 trillion (acceptance of Rs1.562 trillion). The government followed a calibrated acceptance strategy to manage cost and rollover risk. As a result, credit to the private sector remained subdued throughout the year. High borrowing costs discouraged private sector firms from taking new loans while macroeconomic uncertainty and weakened business confidence also dampened demand for credit. Furthermore, restrictions on imports and foreign exchange shortages earlier in the fiscal year adversely impacted industries that rely on imported raw material and machinery, further reducing the need for private borrowing. The survey suggests that private sector credit growth was either stagnant or negative in real terms when adjusted for inflation, signalling constrained access to affordable financing. On the other hand, the government's borrowing requirements remained elevated due to a large fiscal deficit and the need to meet substantial debt servicing obligations. Consequently, banks found it easier and safer to park their funds in government debt rather than riskier private sector lending. This behaviour has caused a "crowding out" effect, limiting credit availability for productive sectors such as small and medium enterprises (SMEs), agriculture and export-oriented industries – sectors that are essential for economic diversification, job creation and sustainable growth. Recognising this imbalance, the State Bank of Pakistan (SBP) introduced various policy measures to promote private-sector credit. These include the Export Finance Scheme (EFS), Long-Term Financing Facility (LTFF) and SME Asaan Finance (SAAF), designed to offer concessional financing to priority sectors. However, the uptake of these facilities has remained moderate, largely due to the high cost of borrowing, uncertain economic prospects and low-risk appetite among both lenders and borrowers. The Economic Survey cautions that unless private sector credit conditions improve, the country's broader goals of industrial modernisation, technological upgrading and export competitiveness may remain unfulfilled. The limited flow of financing to the private sector restricts the potential for new investment, expansion of productive capacity and diversification of the economy. This structural weakness poses a long-term challenge to Pakistan's growth trajectory and must be addressed through coordinated fiscal, monetary and structural reforms aimed at reducing the government's borrowing needs and enhancing the creditworthiness of private enterprises. Financial inclusion remains a strategic priority but continues to face hurdles. The survey notes encouraging growth in microfinance and branchless banking sectors, yet large segments of the population – particularly women and rural communities – remain underserved. The microfinance sector reported significant expansion, with active borrowers increasing from 9.56 million in December 2023 to over 12.34 million by the end of 2024. Total deposits in microfinance institutions rose from Rs597 billion to Rs732.9 billion over the same period. However, the average loan size decreased from Rs59,988 to Rs48,971, indicating smaller loan amounts that may limit economic empowerment potential. Branchless banking, a vital tool for reaching the underserved population, saw positive momentum as well. The number of branchless banking accounts increased 11% to 126.7 million in December 2024, with transaction volumes growing 38% to over 5.4 billion during the year. The value of these transactions surged 42% to Rs25.8 trillion, highlighting growing reliance on digital financial services. Despite these gains, infrastructure gaps, limited digital literacy and low trust in formal financial institutions continue to impede broader financial inclusion.
Express Tribune
11-06-2025
- Business
- Express Tribune
Govt raises Rs1.1trin debt auctions
Listen to article The government raised approximately Rs1.1 trillion through auctions of Market Treasury Bills (MTBs) and floating-rate Pakistan Investment Bonds (PIBs). In the MTB auction, bids worth Rs853 billion were accepted by the State Bank of Pakistan. Similarly, the bond auction saw total acceptance of Rs206.91 billion. Meanwhile, the Pakistani rupee weakened against the US dollar on Wednesday, slipping 0.09%. By the day's close, the local currency stood at 282.47 per dollar, down 26 paisa compared to the previous close at 282.21. On the global front, both the US dollar and Chinese yuan remained stable as the two nations wrapped up trade negotiations in London, signalling a potential easing of their prolonged dispute, though details were limited. Gold prices in Pakistan edged higher on Wednesday, mirroring gains in the international market, where bullion rose following softer-than-expected US inflation data. The easing inflation bolstered expectations that the Federal Reserve may begin cutting interest rates by September, lifting investor sentiment. In the domestic market, the price of gold per tola increased Rs600 to Rs352,900 while the price for 10 grams rose Rs514 to Rs302,554, reported the All Pakistan Sarafa Gems and Jewellers Association. This followed a sharp drop on Tuesday when the per-tola price fell Rs6,100.
