Pakistan's Foreign Investment Exodus: Causes and Concerns

Pakistan faces significant foreign investment outflows, with nearly USD 1 billion withdrawn from treasury bills. Major investors like the UK, UAE, and US have pulled funds, leaving a fragile economy. Despite efforts to offer higher T-bill yields, investor confidence dwindles due to economic and political uncertainty.

Peculiar economic shifts in Pakistan have resulted in a massive outflow of foreign investments, as highlighted by recent financial data indicating a near billion-dollar retreat from treasury bills by just three nations.

The State Bank of Pakistan's figures show that between July 1 and March 14, 2025, the country experienced T-bill inflows of USD 1.163 billion against outflows of USD 1.121 billion, producing a meager net balance of USD 42 million. This trend underscores substantial caution among investors, notwithstanding the country's competitive returns.

This fiscal retrenchment, predominantly by major investors such as the United Kingdom, United Arab Emirates, and the United States, foregrounds the external sector's vulnerability, exacerbated by heavy external debt servicing obligations that strain economic stability and impair confidence in the country's financial landscape.

(With inputs from agencies.)