Foreign Investment in Pakistan's Treasury Bills Remains Stable Amid Rising Tensions

Strategic Insights -

Despite the ongoing conflict with India, Pakistan's treasury bills continue to attract foreign investment, with a notable inflow of $73.6 million in May. However, the equity market witnessed a net outflow of $26 million during the same period, as investors remained cautious. The State Bank's data reveals that foreign inflows in T-bills have totaled $1.247 billion, while outflows reached $1.447 billion for the July-May period of FY25.

Key Takeaways:

  • Foreign investment in Pakistan's treasury bills reached $73.6 million in May, despite the conflict with India.
  • The equity market saw a net outflow of $26 million in May, with outflows totaling $64.6 million and inflows amounting to $38.7 million.
  • The UAE contributed the highest inflow of $50 million, while Britain saw the largest outflow of $62 million.
  • Pakistan's foreign direct investment has stagnated at around $2 billion annually for over a decade.
  • The State Bank's interest rate cut from 22% to 11% led to a decline in returns on T-bills, contributing to higher outflows.
  • The government borrowed Rs3.7 trillion from banks during the period, lower than the Rs7.76 trillion borrowed last year.
  • Sukuk bonds issued through the stock exchange have also raised funds for the government.

Statistics:

  • Foreign investment in T-bills reached $73.6 million in May.
  • Equity market outflows totaled $64.6 million, while inflows were $38.7 million.
  • Highest inflow: $50 million from the UAE.
  • Largest outflow: $62 million to Britain.
  • Foreign direct investment stagnated at $2 billion annually for over a decade.
  • T-bill inflows for the July-May FY25 period: $1.247 billion.
  • T-bill outflows for the July-May FY25 period: $1.447 billion.
  • Borrowing from banks during the period: Rs3.7 trillion.
  • Borrowing from banks last year: Rs7.76 trillion.

Sources:

  • (No specific source mentioned in the original text)