The federal government of Pakistan has announced plans to borrow Rs4.9 trillion from commercial banks during the first quarter of 2026, according to the latest auction calendar released by the State Bank of Pakistan (SBP). This borrowing will be executed through a combination of short-term treasury bills (T-bills) and longer-term Pakistan Investment Bonds (PIBs), signaling a cautious yet strategic approach to debt management.
Of the total borrowing, the government aims to raise Rs3.25 trillion through T-bills, which will have maturities of one, three, six, and twelve months. The preference for six- and twelve-month T-bills reflects an effort to maintain flexibility in managing short-term funding requirements, particularly in light of anticipated monetary easing in the coming months. This strategy also keeps the T-bill targets below maturities to reduce short-term liquidity pressures on the banking system.
In addition to T-bills, Pakistan plans to issue PIBs worth Rs1.65 trillion, targeting maturities ranging from two to fifteen years. The focus of this issuance will remain on medium-term maturities, with minimal reliance on long-term bonds. Floating-rate instruments will be selectively employed, allowing the government to manage duration risk while maintaining a stable yield curve. Experts interpret this borrowing mix as indicative of prudent debt management and a steady outlook for money-market conditions.
The State Bank of Pakistan has recently reduced its benchmark interest rate by 50 basis points, bringing it down to 10.5%. This move marks a cumulative reduction of 1,150 basis points since the rate peaked at 22% in June 2024. The central bank’s easing of interest rates is aligned with the government’s borrowing strategy, creating an environment that encourages liquidity flow while balancing inflationary pressures.
Pakistan recorded a fiscal surplus of 1.6% of GDP, equivalent to Rs2.1 trillion, for the July-September period of FY26. Although slightly lower than last year’s 1.7% surplus, this positive balance was largely supported by Rs2.42 trillion in central bank profits, driven by record-high positions in open market operations. Analysts note that the surplus provides the government with additional fiscal space to manage debt repayments and support economic growth.
Financial observers suggest that the government’s borrowing plan, combined with the SBP’s monetary policy stance, reflects a careful balancing act between stimulating liquidity and maintaining financial stability. By prioritizing short- to medium-term instruments, the authorities aim to avoid excessive pressure on long-term yields while ensuring that the banking system can efficiently absorb the new debt.
Overall, the federal borrowing strategy underscores a disciplined approach to fiscal management, complemented by monetary easing, which may help sustain investor confidence and support Pakistan’s broader economic recovery. With careful execution, the planned Rs4.9 trillion borrowing from commercial banks could strengthen both the short-term funding framework and long-term debt sustainability.
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