- Foreigners purchased $1.183 billion in T-bills but withdrew $1.433 billion from July 1, 2024, to May 2, 2025
Foreign investors have pulled a net $42.2 million from Pakistan’s treasury bills (T-bills) as of May 2, 2025, following a decline in interest rates, according to the latest data from the State Bank of Pakistan (SBP).
The SBP on May 5 reduced its benchmark interest rate by 100 basis points to 11%, the lowest in three years, following a series of rate cuts from a high of 22%. The policy rate has now been reduced by 11 percentage points since June 2024, further diminishing the appeal of Pakistan’s fixed income securities.
While foreign investment amounted to $9.998 million in T-bills, withdrawals totaled $52.208 million. This marks a continuation of the downward trend seen in previous months, with T-bills recording net outflows of $187.9 million in April and $197.4 million in March.
Between July 1, 2024, and May 2, 2025, foreign investors purchased $1.183 billion in T-bills but withdrew $1.433 billion, resulting in a cumulative net outflow of $250 million.
Analysts point to the reduction in interest rates as the main factor behind this trend, making T-bills less attractive to investors. Concerns about the gradual depreciation of the Pakistani rupee have also contributed to the persistent outflows.
Additionally, the geopolitical situation between Pakistan and India has added to investor uncertainty. A brief military conflict in early weeks of May, exacerbated concerns. Although the two nations agreed to a ceasefire on May 10, the conflict has strained investor confidence in Pakistan’s economy.
On a positive note, Pakistan received a $1.02 billion tranche from the International Monetary Fund (IMF) as part of its $7 billion loan program, pushing the country’s foreign exchange reserves to $11.45 billion.
The IMF’s next review is scheduled for the second half of 2025, during which the institution will discuss the terms for Pakistan’s 2026 fiscal year budget.
