Foreign Investment in Pakistan Bonds Crosses $500 Million
Foreign investment in Pakistan Investment Bonds (PIBs) went over $500 million in the first four months of the 2026-27 financial year. This shows growing interest in the higher returns offered by local bonds.
Treasury Bill Inflows
Inflows into treasury bills (T-bills) reached $238 million during the July to October period of FY27.
State Bank Raises Policy Rate
Returns on local bonds were already the highest in the region when the State Bank of Pakistan (SBP) increased its policy rate by 50 basis points to 12 percent on October 26.
Why Investors Are Attracted
The financial sector says the returns are too strong to ignore for both foreign and local investors. Even though Pakistan expects $45 billion in remittances in FY27, the government and the State Bank are still looking for other sources of dollars.
Pakistan is under an IMF programme, which has brought stability to the economy and reduced risks. The IMF and the World Bank have recognised this stability, although they also point out that the country faces severe poverty.
Latest State Bank Data
State Bank data shows investors bought PIBs worth $509.2 million from July to October in FY27. This is the highest amount for this period. About $251 million came in October alone.
Top Investing Countries
The United Arab Emirates invested $395.7 million of the total in PIBs. The UAE has been under severe economic pressure since the Gulf war started on February 28. Dubai, its biggest attraction, relied on trade, tourism, and property, all of which have dropped sharply.
Bahrain was the second-largest investor in PIBs with $80 million. Bahrain was also badly affected by the war. It invested $72 million in T-bills during July to October.
The United Kingdom was the largest investor in T-bills with $80 million. Inflows into the stock market were the lowest at $124.4 million over the four months. Total inflows into local bonds and the stock market were $872 million.
Returns and Risk-Free Investment
The six-month T-bill now offers a 12.54 percent return after the SBP policy rate increase. The return is attractive, but some analysts believe many Pakistanis are also buying local bonds through overseas accounts because of the high returns and the near-risk-free nature of the investment.
The investment is seen as risk-free because the exchange rate has stayed stable for more than a year.
Impact on Private Sector
Some financial experts say higher returns on PIBs and T-bills have drawn more local investment. This leaves little room for the private sector to borrow this expensive money from the banking system.
The government is trying to make banks lend to small and medium enterprises and the housing sector. However, banks have been too slow in lending to bring any major change to these two sectors.
Published in Dawn, November 10th, 2026
Source: dawn