KARACHI: The majority of the foreign investment made in Pakistan’s treasury bonds has been withdrawn, the State Bank of Pakistan (SBP) data reveals.
Despite offering a hefty 11.5 per cent profit on treasury bills, the Middle East tension has caused the investors to take the amount out of the country.
Total foreign inflows into government securities stood at $886.7 million during the first three quarters of the current fiscal year. Around $794 million has been withdrawn during the period, leaving just $93 million in treasury bills.
In March, around $227 million exited treasury bills compared to just $19 million in fresh inflows. The largest withdrawal, $281 million, was repatriated to the United Kingdom. Investors from the UAE pulled out $209 million, followed by Bahrain at $170 million, Singapore at $77.6 million, and the United States at $32 million.
The impact of this withdrawal can prove harmful for the economy in the long run. The United Arab Emirates has recently decided not to roll over a $2 billion deposit maturing this month. In addition to that, it has demanded the return of all the deposits made with Pakistan.
China and Saudi Arabia also maintain key deposits with SBP, but uncertainty now surrounds whether these arrangements will continue unchanged if issues persist. It will be really challenging for Pakistan to maintain the current account balance amid deposit withdrawal and rising cost of energy imports.
As per the media reports, around $5.3 billion is expected to be paid off in bonds, UAE deposits and borrowings under other commitments.
