Pakistan is witnessing a significant outflow of foreign investment from its financial markets, particularly in government Bonds. Over the past nine months, nearly $800 million has been withdrawn from domestic securities. This trend reflects growing concerns among global investors about economic and geopolitical risks.
According to the State Bank of Pakistan, foreign investment in government Bonds initially reached around $886.7 million. However, withdrawals surged to approximately $794 million during the same period. As a result, only about $93 million remains invested, which is nearly 10% of the original amount.
Experts say that despite attractive returns, investor confidence has weakened. Treasury bills were offering yields close to 11.5%, which is considered competitive. However, rising global tensions, including concerns linked to the Gulf region, have increased uncertainty. This situation has made Pakistani Bonds appear riskier to foreign investors.
The outflow has been particularly noticeable in recent months. In March alone, about $227 million exited from treasury bills. At the same time, new inflows were limited to just $19 million. This sharp difference highlights declining investor interest in local Bonds.
Country-wise data shows that the largest withdrawals were made by investors from the United Kingdom, totaling $281 million. This was followed by the United Arab Emirates with $209 million, Bahrain with $170 million, Singapore with $77.6 million, and the United States with $32 million. These figures indicate a broad-based reduction in foreign participation.
Beyond Bonds, Pakistan also faces risks related to external financial support. Reports suggest that the United Arab Emirates may not roll over a $2 billion deposit due this month. Similar concerns exist regarding deposits from China and Saudi Arabia. These funds play a key role in maintaining foreign exchange reserves.
The situation could put pressure on Pakistan’s currency and financial stability. The central bank’s payment schedule shows that around $5.3 billion in external obligations is due soon. This includes repayments for Bonds, deposits, and other borrowings.
Analysts believe that while the bond outflow alone may not cause an immediate crisis, the combined impact of reduced investment and possible deposit withdrawals could be serious. Restoring investor confidence will be essential to stabilize the market.
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Overall, the decline in foreign investment in Bonds signals a challenging period for Pakistan’s economy. Policymakers may need to take steps to improve stability and attract investors back into the market.
