The government of Pakistan raised around ₨. 950 billion through a treasury bill auction on Wednesday as borrowing costs continued to increase after the recent interest rate hike by the State Bank of Pakistan.
According to auction details, investors submitted bids worth more than ₨. 2.5 trillion, while the government accepted bids close to its ₨. 1 trillion target.
Officials said yields increased on most short-term government papers, marking the second upward adjustment since the central bank raised its policy rate to 11.5% in April.
The biggest increase was seen in the 12-month treasury bills, where returns rose by 40 basis points.
Six-month papers also recorded a notable increase, while three-month papers saw only a slight rise. However, the one-month tenor experienced a small decline in yields.
Reports showed that a large portion of the funds was raised through competitive bidding, while the remaining amount came from non-competitive bids submitted by institutional investors.
Financial analysts say the latest auction reflects the government’s continued dependence on domestic borrowing to meet fiscal and financing needs.
Commercial banks and financial institutions remain major buyers of government securities due to attractive returns and lower risk.
The State Bank of Pakistan recently noted in its half-yearly report that banks are investing a significant share of their liquidity into government securities instead of lending to businesses and industries.
According to central bank data, private sector credit growth slowed sharply during the first half of FY26 compared to the previous year.
Economists warn that rising domestic borrowing and higher debt servicing costs could continue increasing pressure on the country’s public finances.
Experts say higher borrowing costs may also affect economic growth, investment activity, and private sector expansion if credit availability remains limited in the coming months.