KARACHI: The government raised Rs131.4 billion through the auction of Pakistan Investment Bonds (PIBs) on Tuesday, further increasing domestic debt volume.

Data from the State Bank shows that the government raised the highest amount, Rs115bn, through three-year PIBs against bids of Rs154.3bn, with a 16.6 per cent rate of return.

The lowest amount, Rs500 million, was raised for five-year PIBs against bids of Rs45bn. The rate of return on this tenor was 15.44pc.

The government raised Rs13.4bn for the benchmark 10-year tenor with a 15.25pc cut-off yield. The bids for the 10-year bonds amounted to Rs47.4bn.

The government raised Rs128.87bn through the auction, whereas the total amount raised was Rs131.4bn, including the non-bid amount.

The government has been accumulating long-term PIBs, which have now reached a significant amount of Rs26.53 trillion as of April 2024. This debt was accumulated during the previous tenure of Nawaz Sharif, with Mr Dar as the finance minister, who was keen on raising long-term debt to avoid the burden of huge servicing each year.

As a result, the government now spends almost its entire tax revenue on interest rate payments.

Published in Dawn, June 26th, 2024