UK, UAE & US Withdraw $1 Billion from Pakistan’s Treasury Bills Amid Global Economic Uncertainty
The global economy has been experiencing unprecedented uncertainty in recent times, and Pakistan is no exception. The country has been facing a significant outflow of foreign investment, with major investors such as the UK, UAE, and US withdrawing nearly $1 billion from its treasury bills. This development has sent shockwaves through the financial markets, leaving many wondering what the future holds for Pakistan’s economy.
According to the State Bank of Pakistan, between July 1 and March 14 this fiscal year, inflows into T-bills totalled $1.163 billion, while outflows stood at $1.121 billion, leaving a net balance of $42 million. This is a staggering reversal of fortunes, considering that Pakistan had been enjoying a significant influx of foreign investment in recent years.
The outflow of foreign investment is attributed to the global economic uncertainty, which has been exacerbated by the US-China trade tensions and the ongoing COVID-19 pandemic. The UK, UAE, and US are among the top investors in Pakistan, and their decision to withdraw their funds has sent a negative signal to the market.
The UK, in particular, has been a significant investor in Pakistan’s treasury bills, with a total investment of around $400 million. However, in recent months, the UK has reduced its investment by around $200 million, citing concerns over the country’s economic stability.
The UAE, on the other hand, has been a major investor in Pakistan’s energy sector, with a significant stake in the country’s power generation and distribution infrastructure. However, the UAE has also reduced its investment in Pakistan’s treasury bills, citing concerns over the country’s ability to pay back its debts.
The US, which has been a major ally of Pakistan, has also reduced its investment in the country’s treasury bills. The US has been concerned over Pakistan’s economic stability, particularly in the wake of the country’s ongoing debt crisis.
The outflow of foreign investment has had a significant impact on Pakistan’s economy, with the country’s currency, the Pakistani rupee, depreciating by around 10% against the US dollar in recent months. The country’s stock market has also been affected, with the KSE-100 index declining by around 15% in the past quarter.
The government of Pakistan has been trying to address the issue by implementing a range of economic reforms, including reducing its budget deficit and increasing its revenue collection. However, the country still faces significant challenges, including a high level of debt and a weak banking sector.
The outflow of foreign investment is also likely to have a significant impact on Pakistan’s ability to implement its planned economic reforms. The country’s economic stability is crucial for its ability to implement its planned reforms, including reducing its debt and increasing its revenue collection.
In conclusion, the outflow of foreign investment by the UK, UAE, and US from Pakistan’s treasury bills is a significant development that has sent shockwaves through the financial markets. The country’s economy faces significant challenges, including a high level of debt and a weak banking sector, and the government will need to implement a range of economic reforms to address these issues.
