GDPs attract $ 256 million net inflow in 12 months – Journal


KARACHI: Foreign Investments in Pakistan Investment Bonds (GDP) recorded a cumulative net inflow of $ 256 million in the outgoing fiscal year, unlike the trend of T-bills and actions.

The latest data from the State Bank of Pakistan (SBP) released on Wednesday revealed that inflows of stocks and T-bills were lower than outflows, resulting in negative numbers for both segments.

Long-term domestic bond GDPs remained attractive to foreign investors, as yields were much higher than those on investments in government bonds internationally. Ten-year GDPs offered a return of 9.84% at the June 9 auction.

In fiscal year 21, inflows to PBBs amounted to $ 277.5 million while outflows reached $ 21.5 million. The cumulative net contribution amounted to $ 256 million.

The largest inflows in BIP came from the United States which reached $ 118.5 million in FY21. Luxembourg’s inflows were the second highest at $ 115.3 million, but an outflow of $ 11.7 million was also noted from the country.

Inflows of equities and treasury bills were much higher than those of BIPs, but the overall impact was negative due to larger outflows.

The net inflow of shares was $ 681 million compared to an outflow of $ 1,101 million for the full year, recording a net outflow of $ 420 million. Likewise, treasury bill inflows in FY21 were $ 688 million while outflows were $ 890 million. Net outflows were $ 202 million.

Total net inflows of GDP, treasury bills and stocks amounted to $ 1,647 million, compared to outflows of $ 2,013 million in fiscal year 21. Net outflows of $ 366.6 million of dollars were recorded in FY21.

However, in June, the last month of FY21, a change was noted as net inflows were higher at $ 163.4 million than outflows of $ 150.8 million.

The major change in June was the large inflow of $ 93.5 million in treasury bills compared to the outflow of $ 40.1 million. This large influx offset the impact of the huge outflows of $ 136.8 million in equity compared to inflows of just $ 48 million in June. GDPs attracted $ 22 million in the month as outflows were nil, helping the country stay positive with net foreign investment.

The country was unable to improve its foreign investment during FY21, which fell 27.7% to $ 1.7 billion in the 11 months (11MFY21).

However, the May 21 fiscal year indicated a change, with foreign direct investment (FDI) surging 63% to $ 198 million, from $ 121 million in the same month last year. If the change persists, the new fiscal year could see larger FDI inflows.

Along with the record inflows of remittances in FY21, the country also received $ 1.5 billion through the Roshan Digital Account (RDA) opened by Pakistanis overseas.

However, despite these inflows, the country borrowed over $ 12 billion in FY11MFY21, 63% more than in the same period of FY20.

Posted in Dawn, July 1, 2021

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