Gulf Nations Drive 90% of Foreign Capital into Pakistan's Debt Market

The UAE has emerged as the largest Gulf investor in Pakistan’s government debt market, injecting $130 million (Dh477 million) into domestic bonds during the first nine days of October. Data released by the State Bank of Pakistan (SBP) on Sunday, 18 October, shows the UAE accounted for nearly 70 per cent of all foreign inflows into the sector during that period. UAE and Bahrain Lead Inflows Between 1 October and 9 October, Pakistan attracted a total of $188 million in foreign investment through treasury bills (T-bills) and Pakistan Investment Bonds (PIBs). The UAE’s contribution included $80 million in long-term PIBs and $50 million in short-term T-bills. Bahrain followed as the second-largest Gulf contributor, investing $40 million, including $30 million in PIBs and $10 million in T-bills. Combined, the two Gulf nations represented more than 90 per cent of total foreign investment into Pakistan’s government securities for the nine-day window. This follows a strong performance in September, when UAE-based investors placed $115 million into the market, according to SBP records. Shift Toward Long-Term Debt The surge in investment is driven by high yields and a strategic shift by Pakistan to promote longer-term PIBs over short-term borrowing to reduce repayment frequency. Since the current fiscal year began on 1 July, total foreign investment in government securities has reached $656 million, with $404 million directed toward PIBs. Money market expert S.S. Iqbal noted that much…