PIBs attract net inflow of $256m in 12 months

Published July 1, 2021
The long-term domestic bonds PIBs remained attractive for foreign investors as the returns were much higher than the investments in government bonds internationally. — AFP/File
The long-term domestic bonds PIBs remained attractive for foreign investors as the returns were much higher than the investments in government bonds internationally. — AFP/File

KARACHI: Foreign investment in Pakistan Investment Bonds (PIBs) witnessed a cumulative net inflow of $256 million during the outgoing financial year as opposed to the trend in Treasury bills (T-bills) and equities.

The State Bank of Pakistan’s (SBP) latest data issued on Wednesday revealed that the inflows in equities and T-bills were less than the outflows resulting into negative figures for the two segments.

The long-term domestic bonds PIBs remained attractive for foreign investors as the returns were much higher than the investments in government bonds internationally. Ten-year PIBs offered 9.84 per cent return in the auction held on June 9.

During FY21, inflows in PIBs were $277.5 million while the outflows reached $21.5m. The cumulative net inflow was $256m.

The highest inflows in PIBs were from the United States which reached $118.5m in FY21. The inflows from Luxemburg were the second highest with $115.3m but an outflow of $11.7m was also noted from the country.

The inflows in equity and T-bills were much higher than the PIBs but the overall impact was negative due to higher outflows.

Net inflow in equities was $681m against the outflow of $1,101m during the entire fiscal year, recording a net outflow of $420m. Similarly, the inflows in T-bills during FY21 were $688m while outflows were $890m. Net outflow was $202m.

The total net inflows of PIBs, T-bills and equities were $1,647m compared to the outflows of $2,013m during FY21. Net outflow of $366.6m was witnessed in FY21.

However, in June, the last month of FY21, a change was noted as the net inflow was higher at $163.4m than the outflow of $150.8m.

The major change in June was the large inflows of $93.5m in T-bills compared to the outflow of $40.1m. This big inflow neutralised the impact of huge outflow of $136.8m from equity compared to inflow of just $48m during June. PIBs attracted $22m during the month while the outflow was zero — helping the country to remain on positive side with net foreign investment.

The country could not improve its foreign investment during FY21 which fell by 27.7pc to $1.7bn during the 11 months (11MFY21).

However, May FY21 indicated a change as the Foreign Direct Investment (FDI) jumped by 63pc to $198m compared to $121m in the same month last year. If the change persists, the new financial year could see higher FDI inflows.

With the record inflows of remittances during FY21, the country also received $1.5bn through the Roshan Digital Account (RDA) being opened by overseas Pakistanis.

However, despite these inflows the country borrowed over $12 billion during the 11MFY21 which was 63pc higher than the same period in FY20.

Published in Dawn, July 1st, 2021

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