With $3.489 billion inflows and $488 million outflows, foreign investment in the government debt instruments, including T-Bills and Pakistan Investment Bonds (PIBs) stood at $3 billion during this fiscal year (FY20). Most of the investment, ie, $2.94 billion, was arrived in T-bills while the remaining $60 million investment was attracted by PIBs.

However, on March 3, there were no fresh inflows in any government security and the entire transactions were made for divestment. According to latest data released by State Bank of Pakistan (SBP), foreign investors divested some $103 million (net) from investment in T-Bills on March 3, 2020. According to Special Convertible Rupee Account (SCRA) data the entire T-Bills selling was made by UK-based investors.

Cumulatively, with this repatriation, total divestment during first three days of March 2020 reached $174.416 million. Divestment in T-bills during this fiscal year stood at $488.34 million, out of which some $450.374 million were withdrawn by UK investors and some $25.68 million by the US investors.

However, net investment in T-bills stood at $2.94 billion during July 2019 till date. The State Bank believes that massive foreign investment in government's securities is manifestation of growing confidence of international investors on the positive outlook of Pakistan's economy.

SBP Governor Dr Reza Baqir recently said that the market-based exchange rate system has provided support to attract more foreign investment in debt securities. He said that risks posed by foreign investments in debt instruments are limited and the SBP is closely monitoring the developments in the financial sector and ready to take action against any risk. Foreign investment in government debt instrument has also helped build the country's foreign exchange reserves.

Copyright Business Recorder, 2020