In March alone, Pakistan Investment Bonds (PIBs) attracted highest foreign investment of over $100 million indicating the growing interest of foreign investors in Pakistan.
Foreign investors invested $240.69m in the PIBs during July-March FY21 according to the latest data released by The State Bank of Pakistan on Wednesday. The inflows in the PIBs suggest that the investor confidence is on the rise and the worsening Covid19 situation in the country has not deterred them from investing in the bonds.
Coronavirus cases have been rising rapidly since the past month and though the government has imposed smart lockdowns in many areas, it has kept the trade and industries open.
$103.09m were invested in the Pakistan Investment Bonds in March which was the single highest inflow during FY21. The PIBs attracted $37.6m in February this year.
Some bankers believe that the investor confidence shows that people are now gaining faith in Pakistan’s economy and the current account surplus has contributed to their confidence.
Others of the view that the return of up to 10 per cent on PIBs was the biggest attraction as nowhere country in the world is offering high returns were available backed by sovereign guarantee.
Pakistan on Tuesday also borrowed $2.5 billion through Eurobonds by offering lucrative interest rates to lenders targeted at building foreign exchange reserves. The yields on 5-year, 10-year and 30-year bonds were six per cent, 7.375pc and 8.875pc, respectively. This development shows that the growing economy of Pakistan has managed to capture the interests of the investors despite the ongoing pandemic.
According to details, the highest amount of $115.2m was invested in the PIBs from the United States during July-March FY21. Investments from US in march alone were worth $23.65m. A reason for this is that the returns offered on PIBs are higher than the ones being offering in the US currently.
The second highest inflow came from Luxembourg which amounted to $77.32m in March alone while its total investment reached $91.9m during the nine months of FY21.
Inflows from Philippines and England amounted to $21.45m and $10.5m, respectively, during the 9MFY21.
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The financial sector is of the view that borrowing from the IMF, World Bank and Asian Development Bank and raising $2.5bn from Eurobonds would result in an increase in the foreign exchange reserves of the country and would also attract more foreign investment in the future.
However, according to World Bank’s Annual Flagship South Asia Economic Focus report released on Tuesday, a speedy economic recovery is not in sight for Pakistan. The country currently has a mere 1.3% growth rate and the public debt stands at an enormous 94% size of the nation’s economy in the current fiscal year.
The Washington Based lender said that the economic recovery of the country remains fragile and the poverty levels are likely to increase too. It also revised its economic growth forecast for the current fiscal year and increased it to 1.3% which is still which is still less than half of around 3% that what the State Bank of Pakistan and the government had predicted. Hans Timmer, WB’s chief economist for the South Asia region, however said that the trajectory was positive.