Investment in government securities has surged sharply across Pakistan, with non-bank holdings reaching a record Rs11 trillion by end-December 2025, as both institutional and provincial investors increasingly channel funds into risk-free government debt instruments.
Overall investments in government papers rose to Rs49.174 trillion by December 2025, up from Rs46.682 trillion in September 2025, reflecting an increase of Rs2.5 trillion in the final quarter of CY2025, according to latest data.
Banks remained the largest investors, holding Rs38.254 trillion in Pakistan Investment Bonds (PIBs), treasury bills, and Sukuk by end-December 2025, significantly outpacing private-sector lending.
Within the non-bank segment—which includes insurance companies, mutual funds, corporates, and provincial governments—investments stood at Rs10.919 trillion, comprising Rs4.008 trillion in treasury bills, Rs5.929 trillion in PIBs, and Rs982 billion in Sukuk.
Provincial governments alone accounted for Rs1.179 trillion in investments by December 2025, with their participation in treasury bills expected to rise further to around Rs1.4 trillion during the April–June 2025–26 quarter, highlighting a growing reliance on domestic debt instruments.
The trend reflects a broader shift in liquidity allocation toward government borrowing rather than private-sector financing, despite concerns over rising debt servicing costs that continue to constrain fiscal space and development spending.
Private-sector credit remained subdued, standing at Rs9.9 trillion by June 2025, compared with banks’ massive exposure to government securities, underscoring a structural imbalance in credit distribution.
Over the past three years, lending growth has averaged around Rs1 trillion annually or less, with experts attributing the slowdown to economic uncertainty and high borrowing costs.
The Asian Development Bank has projected Pakistan’s GDP growth at 3.5 percent for FY26, indicating modest economic expansion amid weak investment activity.
Analysts note that elevated electricity tariffs, policy uncertainty, and high financing costs have further discouraged industrial expansion, prompting some firms to relocate operations abroad, including to Central Asia, Egypt, and Mexico, further weakening domestic private investment momentum.
The post Investment floods into government securities as non-bank holdings hit record Rs11 trillion appeared first on Profit by Pakistan Today.