Foreign investment in Pakistan’s domestic bonds saw a sharp decline during the first 23 days of August, with investors withdrawing $103.5 million from treasury bills, according to data released by the State Bank of Pakistan (SBP).
Market experts attribute this outflow to the country’s ongoing political instability and delays in securing a deal with the International Monetary Fund (IMF).Â
The State Bank is due to announce its monetary policy on Thursday (today), and a rate reduction could further diminish the attractiveness of treasury bills for foreign investors.
SBP data shows that from the start of the fiscal year (July 1) to August 23, total foreign inflows into domestic bonds amounted to $316 million, while outflows reached $197.6 million.Â
Inflows were stronger in July, with $264 million recorded, but dropped significantly to just $52 million in August’s first 23 days.
Foreign direct investment (FDI) also showed promising growth in July, increasing by 63% to $136.7 million, compared to $82 million in the same period last year.Â
However, experts caution that FDI may decline in August if uncertainty surrounding the IMF loan and political instability persists.Â
