Karachi June 27 2023: The government raised PKR 91.83 billion through an auction of fixed-rate Pakistan Investment Bonds (PIBs) compared to a target of PKR 160 billion, as per data published by the State Bank of Pakistan (SBP).
Yesterday, MPC of SBP convened an emergency meeting to respond to fiscal and regulatory developments. The MPC decided to raise the policy rate by 100 bps to 22 percent, effective 27th June 2023.
The Cut-off yield for 3 years PIB remained at 19.35%.
Government received bids of PKR 265 billion for 3 year, PKR 22.5 billion for 5 years and PKR 18.5 billion for 10 year PIB. Government raised PKR 91.8 billion in 3 years.
Bids rejected for 5 and 10 years PIBs. SBP did not receive bids for 15, 20 and 30 years PIB.
The Committee has noted two important domestic developments since the last meeting that have slightly deteriorated inflation outlook and which could potentially increase pressure on the already stressed external account. First, there are certain upward revisions in taxes, duties and PDL rate in FY24 budget as approved by the National Assembly on June 25. Second, the SBP, on June 23, withdrew its general guidance for commercial banks on prioritization of imports. While the MPC views these measures as necessary in the context of completion of the ongoing IMF program, they have increased the upside risks to the inflation outlook. The Committee views that additional tax measures are likely to contribute to inflation both directly and indirectly, while the relaxation in imports may exert pressures in the foreign exchange market. The latter may result in higher-than-earlier anticipated exchange rate pass-through to domestic prices.
