PIBs attract $137m foreign investment in four months.

Byline: Shahid Iqbal

KARACHI -- Pakistan Investment Bonds (PIBs) attracted $37.6 million (Rs6 billion) in February - the highest investment in a single month - during the current fiscal year.

Most of the investments came from the US and the UK where the interest rates are at the historically lowest level.

The total inflows in the PIBs for 2020-21 were $137.6m (Rs21.7bn).

Financial sector experts said the inflow started in Nov 2020 with a slow pace, but the current account surplus of Pakistan's economy provided confidence to the investors and the pace has increased significantly.

Since the emergence of Covid-19 in March 2020, the foreign investment in domestic bonds (PIBs and Treasury bills) fled to the place of origin, fearing a possible grave impact on the national economy.

However, the serious impact of the Covid-19 pandemic in the US and Europe grossly impacted their economies and interest rates fell to the lowest level that created some attraction for investment in Pakistan's domestic bonds which are offering much higher returns compared to most of the world.The Bank of England (BoE) made two emergency interest rate cuts in March 2020 to try and reduce the economic impact of the pandemic. The BoE slashed interest rates from 0.75 per cent to 0.25pc and then from 0.25pc to just 0.1pc, the lowest level on record. The current interest rate was 0.1pc till the first week of Jan 2021.

During the current financial year, total inflow in the PIBs from the United Kingdom was $10.059m, reflecting growing interest from England and other European countries. Pakistan received $14.5m from Luxembourg, with the entire amount coming in February this year.

The...