Investors withdraw $660m from Naya Pakistan Certificates in six months.

KARACHI -- The foreign investors withdrew $660 million from Naya Pakistan Certificates (NPC) during the last six months, compounding the hardship for the country already facing a serious problem of falling foreign exchange reserves.

The withdrawal reflects the growing trust deficit in the country's ability to make payments, though it has yet not defaulted on the external front and is making timely payments of all foreign obligations.

However, the weak position of foreign exchange reserves amid poor economic growth with rising speculations about the growing default risks has made the situation worse. Financial market experts and independent economists have been warning that the prolonged political uncertainty is taking a heavy toll on the economy.

The latest data released by the State Bank of Pakistan (SBP) shows that the foreign investment in NPC kept increasing till March this year, but the change of government in April created uncertainty and the inflows dropped to just $763 million on Sept 30 from $1.423 billion recorded on March 31, an outflow of $660m.

Investments shrink by nearly half to $763m by end of September since April

The data further shows that the total investment in NPC stood at $1.178bn on Sept 30, 2021, which increased to $1.338bn on Dec 31 of that year. It further increased to $1.423bn in March this year but started falling again and reached as low as $763m in September.

The government launched Roshan Digital Account (RDA) in September 2020 to attract foreign investments after facing a shock from outflows of such investments (about $3.5 billion) in domestic bonds like treasury bills and Pakistan Investment Bonds (PIBs). The quick outflows took place just after the emergence of Covid-19 in March 2020. It drastically...