Foreign investment in Pakistan’s domestic government securities reached $188 million during the first nine days of October, signalling increased overseas interest and offering another potential source of foreign exchange for the country.
Latest data from the State Bank of Pakistan (SBP) showed that investors from Gulf countries were particularly active, with growing interest in longer-term Pakistan Investment Bonds (PIBs).
During the period, Treasury bills attracted $78 million in foreign investment, while PIBs received $110 million. Outflows stood at $38.16 million, leaving inflows substantially higher than withdrawals.
UAE and Bahrain Lead Investment Inflows
The United Arab Emirates was the largest source of investment during the nine-day period. UAE-based investors put $50 million into Treasury bills and $80 million into PIBs.
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Bahrain invested $10 million in Treasury bills and $30 million in PIBs, according to the SBP data.
The figures indicate interest in both short-term government securities and longer-term investment instruments.
Pakistan has long sought to attract overseas investors to its government debt market. However, previous foreign inflows were often concentrated in short-term securities and remained relatively modest.
Investment Reaches $656 Million in Current Fiscal Year
Since the beginning of the current fiscal year, foreign investment in Pakistan’s domestic government securities has reached $656 million.
The total includes $404 million invested in PIBs and $252 million in Treasury bills.
The inflows could provide an additional source of foreign exchange at a time when Pakistan continues to face pressure to strengthen its external accounts.
The country received a record $41.5 billion in remittances during fiscal year 2025–26. However, weak export growth has contributed to a widening trade deficit, complicating efforts to maintain a current account surplus.
Gulf Investors’ Interest Draws Different Explanations
Financial experts have offered different explanations for the increase in foreign investment, particularly from Gulf countries.
Some believe Pakistanis living and conducting business in the Gulf may be transferring part of their liquid assets to Pakistan by investing in government securities that offer relatively high returns.
Others point to the attractiveness of returns on Treasury bills and PIBs amid economic uncertainty linked to the continuing regional war.
The recent inflows may provide additional support to Pakistan’s foreign exchange position. However, their longer-term significance will depend on whether investors maintain their positions or withdraw funds as market conditions change.
