Govt Maintains Treasury Bill Rates Above Policy Rate Amid Economic Uncertainty

KARACHI: The government has kept treasury bill rates nearly unchanged in a recent auction, with returns on all tenors exceeding the State Bank’s policy rate of 11.5 percent. This auction, held on Wednesday, is the last before the upcoming monetary policy announcement scheduled for October 26.

The auction results revealed that the government successfully raised Rs417.6 billion, supplemented by an additional Rs267.9 billion through non-competitive bids, culminating in a total of Rs685.5 billion. Investors, primarily banks, are keen to invest their liquidity in government securities as domestic lending options remain severely constrained.

Financial experts note that investor caution is heightened due to ongoing geopolitical tensions, particularly the Gulf war, coupled with political instability within the country. Domestic investors have been looking for government initiatives to stimulate the economy, with the IMF projecting a growth rate of 3.5 percent for FY27, while the finance minister expressed optimism for a 4 percent growth.

The lack of domestic investment poses significant challenges for the economy, as policymakers struggle to attract capital back into the market. The upcoming monetary policy review is expected to address these pressing economic concerns and outline strategies to revitalize investment.