The federal government has raised Rs1.22 trillion through the auction of Treasury bills (T-bills) and Pakistan Investment Bonds (PIBs), according to data released by the State Bank of Pakistan.

The central bank reported receiving bids worth Rs1.73 trillion for T-bills and Rs1.59 trillion for PIBs, reflecting strong investor demand for government securities amid uncertain economic conditions.

The government accepted Rs965 billion in the latest T-bill auction against a target of Rs850 billion, while the maturity amount stood at Rs821 billion.

Analysts expressed concern that the rising investment in risk-free government papers is reducing the flow of credit to the private sector, potentially slowing down industrial and commercial activity.

Since December 2024, private sector borrowing has witnessed a notable decline, underlining banks’ preference for safer government debt.

The cut-off yield for one-month T-bills fell by 6 basis points to 12.32%, while rates for 3, 6, and 12-month papers remained steady.

Economists warn that excessive focus on non-productive government securities may hinder private sector growth, limiting prospects for broader economic recovery.