KARACHI: The State Bank of Pakistan (SBP) on Tuesday announced revised operational instructions and procedures for the buyback of Government Securities in accordance with the MTB Rules 1998 (as amended vide S.R.O 1585 (I)/2023) and PIB Rules 2000.
These new instructions will supersede previous guidelines issued previously. Under the revised framework, SBP will conduct auctions for the buyback of Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs), including Zero Coupon, Fixed, and Floater instruments, on behalf of the Government of Pakistan.
Previously, in a historical move, the federal government conducted the first ever buyback auction of MTBs on September 30, 2024 and accepted bids amounted to Rs 351 billion for T-bills, set to mature in December 2024, leveraging liquidity from the recent SBP profit transfer to finance this effort.
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In a significant move, the federal government conducted first buyback auction of MTBs on September 30, 2024. During this auction, over bids amounting to Rs 563 billion were received, out of which Rs. 351 billion were accepted for T-bills set to mature in December 2024. This initiative leveraged liquidity from the SBP profit transfer, reinforcing the government’s commitment to proactive debt management.
Previously, buyback auction was conducted for short term papers, however, now to further reduce the national debt burden, the government has decided to extend its buyback operations to include long-term bonds. This strategic move aims to enhance debt sustainability and fiscal management.
During the last fiscal year, the SBP recorded a profit exceeding Rs. 3 trillion, which was subsequently transferred to the federal government. This substantial profit provided additional fiscal space, enabling the government to facilitate the buyback of short-term government securities alongside its long-term debt reduction efforts.
The SBP will announce auction details, including the security type, target amount, auction schedule, and results, via its pages on Refinitiv and Bloomberg, as well as on the SBP website. All Primary Dealers will be eligible to submit competitive bids during the auctions. Non-competitive bids will also be accepted under the existing guidelines.
Eligible participants are required to submit bids through the Bloomberg Auction Module (AUPD) within the stipulated time frame, specifying: Bid price per Rs.100 of face value (up to four decimal places) and amount (face value) of the securities.
As per settlement procedures, on the date of settlement, the successfully bought-back securities will be debited from the Subsidiary General Ledger Account (SGLA) of the respective bidders. Simultaneously, their current accounts will be credited with the accepted amount.
Other applicable auction rules and procedures will remain in force, as outlined in various circulars related to the auction of Marketable Government Securities. Analysts said this move by the SBP aims at streamlining the buyback process, ensuring transparency and efficiency in managing government securities.
Market participants are advised to review the updated guidelines and adhere to the revised operational instructions accordingly.
Copyright Business Recorder, 2025
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