KARACHI: The federal government conducted a historic buyback auction of Market Treasury Bills (MTBs) on Monday, accepting bids worth Rs 351 billion.

Analysts consider the government’s decision to buy back short-term T-bills, maturing in December 2024, significant. The effort was financed using liquidity from the State Bank of Pakistan’s (SBP) recent profit transfer.

Tahir Abbas, an analyst at AHL Research, stated, “This initiative will be crucial in reprofiling government debt, reducing interest costs, and enhancing market liquidity. It’s a proactive step to strengthen the government’s financial position and promote economic stability.”

The SBP, acting on behalf of the government, received bids totaling Rs 563.3 billion for 6- and 12-month MTBs, accepting Rs 351 billion despite a target of Rs 500 billion.

For 6-month T-bills, Rs 176 billion were accepted with a maturity date of December 12, 2024. Additionally, Rs 24.25 billion for 12-month T-bills were accepted for the same maturity date. Further bids for six-month bills worth Rs 90 billion and 12-month bills worth Rs 60.75 billion were accepted with a maturity date of December 26, 2024.

The buyback followed improved liquidity after the SBP transferred Rs 3 trillion in profit to the government. The process complies with the MTB Rules 1998, which allow such transactions. The SBP also issued procedural guidelines for the buybacks.

The auction is expected to positively impact debt management and market stability.