Foreign investments in Pakistan’s Treasury bills (T-bills) witnessed a net outflow of $38.5 million during the first 10 days of January, as withdrawals outpaced fresh investments, according to data released by the State Bank of Pakistan (SBP).
Foreign investors pumped $51.978 million into T-bills by January 10, but withdrawals totaled $90.51 million, resulting in a net outflow of $38.5 million. In December, the outflows were even higher at $156.1 million.
From July 1, 2024, to January 10, 2025, total foreign investments in T-bills amounted to $963.4 million, while withdrawals reached $821.4 million, leaving a net inflow of $142 million for the fiscal year so far.
Market analysts attributed the recent outflows to maturing instruments exceeding new investments, coupled with declining returns. The SBP reduced the policy rate by 200 basis points (bps) to 13 percent last month, the fifth consecutive cut since June 2024, bringing the total rate reductions for the year to 900bps.
Despite the outflows, Pakistan’s relatively stable exchange rate has helped mitigate currency risks, preventing larger withdrawals.
The country’s external account has shown notable improvement, supported by a $7 billion loan programme under the International Monetary Fund (IMF).
For the first half of FY25 (July-December), Pakistan recorded a current account surplus of $1.2 billion, compared with a $1.397 billion deficit in the same period last year. This improvement was driven by higher remittances and export growth.
Meanwhile, profit and dividend repatriations by foreign investors surged by 114 percent to $1.215 billion in the first half of the fiscal year. Last year, these outflows were curtailed to preserve dwindling foreign exchange reserves.
Currently, the SBP’s foreign exchange reserves stand at $11.73 billion, providing over two months of import cover.
Last week, the United Arab Emirates (UAE) extended the maturity of $2 billion in deposits with the SBP by another year, ensuring short-term financial stability.
The government is also engaged in efforts to secure a $1 billion loan tranche from the IMF under its Extended Fund Facility (EFF) programme. An IMF mission is set to visit Islamabad next month for the first review of the ongoing programme.
