KARACHI: The government again went beyond its target to borrow through Pakistan Investment Bonds (PIB) mounting debt close to Rs1 trillion in one month.

The State Bank reported on Wednesday that the government raised Rs425 billion through auction of PIBs while the target was just Rs100bn.

The government has been amassing huge amount through PIBs and Sukuk bonds to meet its requirements. The investors also find it attractive to invest for long term in the wake of inching up of inflation that could possibly cut interest rate in future.

In the previous auction of PIBs on March 26, the government had raised Rs530bn encouraging banks and other investors to invest for longer period.

Collectively in the last two auctions, the government raised Rs955bn at rate above 12pc. This massive borrowing slashed government’s borrowing through State Bank and treasury bills.

Bankers said that investing in PIBs instead of t-bills is more attractive as yield is significantly higher.

The detail shows that PIBs of three-year tenure attracted highest amount and collectively in the two auctions half a trillion was invested for three years bonds.

In the latest auction, Rs242bn were invested for three-year PIBs, Rs78bn for five years, Rs96bn for 10 years and Rs980 million for 20 years.

The target for this auction was just Rs100bn. The maturing amount was only Rs26bn while the additional requirement was Rs73bn. However, the government set new records in both the auctions by picking up large liquidity for long term.

The t-bills borrowing has substantially been reduced, in fact, most of the time during this financial year the government borrowing for budgetary support from scheduled banks remained negative.

Currently, as per the report of State Bank, the government borrowing from scheduled banks was just Rs292bn while its borrowing from State Bank was Rs413bn.