HOW high must promised returns be to encourage foreign investors to divert their dollars to Pakistan? Apparently, even an eye-watering 21pc is not enough. The yields on treasury bills are currently better than the rates being offered in India and Bangladesh, but it appears they’re still not sufficient to convince foreign investors to briefly park some direly needed dollars in our economy. According to recent reports, there have been zero dollar inflows in T-bills and Pakistan Investment Bonds since the start of this calendar year. From July till December 2022, inflows in treasury bills had been a meagre $18m, while outflows for the same period were recorded at $59m. In that same period, there was zero inflow in PIBs, while outflows summed up to $0.328m. Quite clearly, foreign investors are content with foregoing otherwise unthinkable gains rather than putting any of their money into Pakistan.

There is a multitude of reasons why the country is being viewed with such disfavour. For one, companies that are already invested in the country are finding it difficult to take any dollars out due to State Bank restrictions impeding profit repatriation. Payments to airlines are held up, imports are held up and the economy is rapidly losing steam. The prospects aren’t bright either, with exports declining, remittances in retreat and no sign of any aid or other inflows to add much-needed liquidity to the country’s foreign exchange reserves. The last time Pakistan achieved success in attracting hot money flows was in 2019 — when the country was still in an IMF programme, had sufficient reserves, and political instability was not wreaking the kind of havoc it is today. No one can be expected to be willing to bet on our future, given the state we are currently in. The government should keep its eye on the ball and continue working to remove the remaining impediments to the resumption of the IMF programme.

Published in Dawn, March 23rd, 2023