ISLAMABAD: Despite heightened tensions with India, Pakistan has continued to see robust foreign investment in treasury bills.
The State Bank of Pakistan (SBP) reported $73.6 million in foreign inflows into T-bills during May 2025.
India launched an attack on May 6, but investment behavior in government debt instruments remained stable.
Foreign investment is generally expected to retreat during times of conflict.
However, the opposite occurred in Pakistan’s case.
Equity markets, on the other hand, showed signs of stress with higher outflows than inflows.
Equity Investors Exit, T-Bill Investors Stay
According to SBP data, May saw $38.7 million in equity inflows but $64.6 million in outflows.
T-bills recorded $73.6 million in inflows and $66 million in outflows.
The UAE contributed the highest T-bill inflow at $50 million.
The UK saw the largest outflow at $62 million.
Analysts believe Pakistan’s secure T-bill instrument remains attractive to overseas investors.
Despite international uncertainty, confidence in short-term sovereign debt remains intact.
Falling Returns Impact Long-Term Outlook
The overall FY25 (July–May) T-bill inflows reached $1.247 billion.
However, outflows exceeded inflows at $1.447 billion due to falling returns.
The SBP has cut interest rates from 22% to 11% since June last year, making T-bills less lucrative.
Pakistan has been struggling to boost foreign direct investment, which has stagnated at around $2 billion annually.
A special investment council has been formed but has yet to yield significant results.
Meanwhile, the government borrowed Rs3.7 trillion from banks in FY25, down from Rs7.76 trillion last year.
