UK, UAE & US Withdraw $1 Billion from Pakistan’s Treasury Bills Amid Global Economic Uncertainty
The global economy has been experiencing a wave of uncertainty in recent times, with various countries imposing tariffs and sanctions on each other. The latest instance of this uncertainty has been felt in Pakistan, where the country has witnessed a significant outflow of foreign investment. According to a recent report, the UK, UAE, and US have withdrawn nearly $1 billion from Pakistan’s treasury bills, leaving a net balance of just $42 million.
The State Bank of Pakistan (SBP) has revealed that between July 1 and March 14 of the current fiscal year, inflows into Pakistan’s treasury bills (T-bills) totalled $1.163 billion. However, outflows during the same period stood at $1.121 billion, resulting in a net balance of just $42 million. This significant outflow of foreign investment is a cause for concern for Pakistan’s economy, which is already facing challenges in terms of revenue generation and debt sustainability.
The reason behind this sudden outflow of foreign investment is attributed to the global economic uncertainty, which has been exacerbated by the ongoing trade tensions between the US and other major economies. The imposition of tariffs by the US on goods imported from various countries, including Pakistan, has led to a decline in investor confidence, resulting in a flight of capital from emerging markets like Pakistan.
The UK, UAE, and US are among the largest investors in Pakistan’s T-bills, and their decision to withdraw their funds has had a significant impact on the country’s economy. The outflow of foreign investment has resulted in a decline in the country’s foreign exchange reserves, which has put pressure on the Pakistani rupee to appreciate against the US dollar.
Pakistan’s economy has been facing challenges in recent times, with the country’s debt sustainability being a major concern. The country’s debt has been increasing steadily over the years, with the total public debt reaching a record high of over $90 billion in the fiscal year 2019-2020. The outflow of foreign investment has further complicated the situation, making it difficult for the government to generate revenue and service its debt.
The Pakistan Stock Exchange (PSX) has also been impacted by the outflow of foreign investment, with the KSE-100 index declining by over 10% in recent weeks. The decline in the stock market has led to a decline in investor confidence, making it difficult for companies to raise capital and grow their businesses.
The government of Pakistan has been trying to address the issue of foreign investment outflow by implementing various measures to boost investor confidence. The State Bank of Pakistan has been actively engaging with foreign investors to address their concerns and provide them with a stable investment environment.
In recent months, the government has also taken steps to improve the business environment, including simplifying the regulatory framework and reducing bureaucracy. The government has also been working to attract foreign investment in various sectors, including infrastructure, energy, and manufacturing.
Despite these efforts, the outflow of foreign investment is likely to continue in the near term, given the ongoing global economic uncertainty. The government will need to continue to work to improve investor confidence and attract foreign investment to support the country’s economic growth.
In conclusion, the withdrawal of nearly $1 billion from Pakistan’s treasury bills by the UK, UAE, and US is a significant development that has implications for the country’s economy. The global economic uncertainty is expected to continue in the near term, and the government will need to continue to work to improve investor confidence and attract foreign investment to support the country’s economic growth.
