Government Targets Rs5.75 Trillion via Domestic Markets for May-July 2025

The federal government is set to raise Rs5.75 trillion through domestic markets from May to July 2025, leveraging Market Treasury Bills, Fixed-Rate Pakistan Investment Bonds, and Floating-Rate Pakistan Investment Bonds, a massive borrowing plan with significant tax implications for businesses. Our tax law firm advises clients to ensure Federal Board of Revenue compliance amid this debt-driven fiscal strategy.

According to the State Bank of Pakistan auction calendar, Rs2.6 trillion will come from short-term Market Treasury Bills via six auctions—Rs850 billion on May 14, Rs650 billion on May 27, and Rs500 billion each on June 11 and June 25—while Rs2.5 trillion will be raised through long-term Pakistan Investment Bonds, with Rs900 billion from fixed-rate bonds (three Rs300 billion auctions) and Rs1.6 trillion from floating-rate bonds (six auctions at 11.923% coupon), per the text. Coupon rates for fixed-rate bonds were cut to 12% for 3-year, 5-year, and 10-year tenors as of January 16, 2025, down from 14% and 13%, reflecting fiscal pressures, as noted in web sources like Profit by Pakistan Today.

From a tax law perspective, increased domestic borrowing may impact withholding tax at 15% on bond interest under Section 6 of the Income Tax Ordinance, requiring investors to ensure compliance. Businesses holding Pakistan Investment Bonds face sales tax adjustments under the Sales Tax Act, 1990, with input tax credits under Section 8B needing reconciliation. Federal Board of Revenue audits could target capital gains under Section 37, as market liquidity shifts. Posts on X reflect investor caution, citing IMF constraints.

Critically, the narrative of “bridging fiscal gaps” may downplay debt sustainability risks—web context highlights external financing struggles, and X sentiment questions long-term growth, suggesting tax volatility. Clients must remain vigilant.

Our firm advises clients to monitor bond investments, ensure withholding tax compliance, and prepare for Federal Board of Revenue audits, navigating this debt-heavy landscape.