KARACHI: In a historical move, the federal government conducted the buyback auction of Market Treasury Bills (MTBs) on Monday and accepted bids amounted to Rs 351 billion.

Analysts said that the government has made a significant and historic move by initiating a buyback of short-term T-bills worth Rs 351 billion set to mature in Dec 2024, leveraging liquidity from the recent SBP profit transfer to finance this effort.

“We believe this initiative will play a crucial role in reprofiling the government’s debt, reducing interest costs, and enhancing overall market liquidity,” Tahir Abbas analyst at AHL Research.

SBP to conduct auctions for MTBs buyback

He said that by taking this proactive step, the government aims to strengthen its financial position while fostering a more stable economic environment.

The State Bank of Pakistan (SBP) conducted the auctions for the buyback of MTBs on behalf of the government of Pakistan.

Overall bids worth Rs 563.3 billion were received for buyback of 6- and 12-month MTBs. Out of total bids, the federal government accepted bids amounted to Rs 351 billion as against target of Rs 500 billion for this auction.

Bids worth Rs176 billion of 6-month and Rs 24.25 billion for 12-month T-Bills were accepted with maturity date of Dec 12, 2024.

In addition, Rs 90 billion for Six months MTBs and Rs 60.75 billion for 12-month short-term bills were accepted with maturity date of Dec 26, 2024.

With improved liquidity position the federal government has started buyback of MTBs. The SBP has recently transferred some Rs 3 trillion profit to the federal government, that has eased the financial burden.

The MTBs Rules 1998 provide for the buyback of MTBs by the government of Pakistan.

Accordingly last week the SBP issued the procedure for execution of such buyback transactions and on Monday conduct auctions for the buyback of MTBs on behalf of the Government of Pakistan.

Copyright Business Recorder, 2024