Foreign investors put $747 million into Pakistan’s government bonds in the first four months of the current fiscal year, drawn by some of the highest returns in the region, according to fresh State Bank of Pakistan data reported by Dawn on November 10, 2026.
What happened?
Foreign investors bought Pakistan Investment Bonds (PIBs) worth $509.2 million during July–October of fiscal year 2026-27, the highest amount in this period. About $251 million of that came in October alone. Inflows into treasury bills (T-bills) totalled $238 million over the same four months. Together with $124.4 million in equity-market inflows, total foreign inflows into domestic bonds and the equity market reached $872 million.
Key details
- The United Arab Emirates was the largest investor in PIBs, putting in $395.7 million. Bahrain was second with $80 million in PIBs, and also invested $72 million in T-bills.
- The United Kingdom was the biggest investor in T-bills, with $80 million.
- The benchmark six-month T-bill offers a 12.54 per cent return after the State Bank raised its policy rate by 50 basis points to 12 per cent on October 26.
- Returns on domestic bonds were already the highest in the region before the rate increase.
- Some analysts believe many Pakistanis are also buying domestic bonds through overseas accounts because of the high returns and the investment’s near-risk-free nature, with the exchange rate stable for more than a year.
- Financial experts cautioned that the high returns are pulling money into government bonds and leaving little room for the private sector to borrow, while the government is pushing banks to lend more to small and medium enterprises and the housing sector.
What it means for people in Pakistan
Strong foreign demand for government bonds brings dollars into the country and signals confidence in Pakistan’s economy under the IMF programme. But the high returns also mean the government pays more to borrow, and banks may prefer lending to the government over businesses and households, which can make credit harder to get for ordinary borrowers.
Source: https://www.dawn.com/news/2043374/high-returns-lure-foreign-investors
