Foreign investment in Pakistan bonds tops $509m in four months as high returns lure buyers
I.I. Chundrigar Road, Karachi's financial district (file photo)
KARACHI: Foreign investors put $509.2 million into Pakistan Investment Bonds in the first four months of the current fiscal year, the highest inflow for the period, according to fresh data from the State Bank of Pakistan. Between July and October 2026, buyers poured money into the longer-dated government securities, and October alone accounted for about $251 million of the total.
Treasury bills drew foreign money too, with $238 million flowing into the short-term paper over the same four months. Together, foreign investment in government securities reached $747.2 million; with $124.4 million into the equity market, total inflows for the period came to $872 million.
UAE leads the way
The United Arab Emirates was by far the largest buyer of Pakistan Investment Bonds, investing $395.7 million — more than three quarters of the total. Bahrain came second, putting $80 million into bonds and another $72 million into T-bills. The United Kingdom was the biggest investor in T-bills, with $80 million.
A 12 per cent rate does the pulling
The State Bank raised its policy rate by 50 basis points to 12 per cent on October 26. The benchmark six-month T-bill now offers a 12.54 per cent return, the highest in the region. The financial sector believes the attraction is too strong to ignore. The exchange rate has also held steady for more than a year, which is why the investment is treated as near risk-free. Some analysts add that many Pakistanis are buying the same bonds through overseas accounts, chasing the same returns.
Stability, and one worry
Pakistan remains under an IMF programme, which has lent stability to the economy and lowered risks, though the IMF and the World Bank both note that severe poverty persists. The worry, raised by some financial experts, is that the same high returns are pulling domestic money into government paper as well, leaving little room for the private sector to borrow at such costly rates — and banks have been slow to lend to small businesses and housing despite government pressure.
