UK, UAE, US withdraw nearly $1 billion from Pakistan's treasury bills

Pakistan has witnessed major outflows of foreign investment with just three countries withdrawing nearly $1 billion from the treasury bills during the current financial year.

According to the State Bank of Pakistan, between July 1 and March 14 this fiscal year, inflows into T-bills totalled $1.163 billion while outflows stood at $1.121 billion, leaving a net balance of just $42 million.

The withdrawal of $1 billion has left the outflows almost matching total inflows in Pakistan's fragile economy leading to investor caution despite attractive returns.

The United Kingdom, traditionally Pakistan's largest T-bill investor, had invested $710 million during FY25 but withdrew $625 million. 

 

The United Arab Emirates and the United States recorded outflows of $205 million and $130 million, respectively.

The Pakistan government to bring in foreign inflows has announced higher yields on its T-bills in comparison to most developed and developing economies.

A financial analyst said foreign investors remained cautious about Pakistan's fragile external sector as the country was burdened by about $25 billion in annual external debt servicing.

To maintain parity, the government has constantly sought funding from the International Monetary Fund (IMF) and is actively trying to reschedule debt with China, the UAE and Saudi Arabia.

What is more concerning is that the country is unable to tap international markets for commercial loans or float bonds, said a senior banker.

A financial analyst said political and economic uncertainty hit the investors' confidence in Pakistan's economy with low growth indicators being red flags.