DID Press: Pakistan’s government bond market is facing a severe liquidity crunch after more than 94 percent of foreign investment exited the country by 17 April, signaling a sharp decline in investor confidence.
Economists attribute the capital flight to a combination of domestic vulnerabilities and regional instability, which have placed mounting pressure on the country’s financial system.
Rising geopolitical tensions and surging import costs—particularly oil, estimated at around 800 million dollars per week—are among the key drivers behind the withdrawal of foreign funds. Investors have raised concerns over both returns and financial security in the market.
In response, the State Bank of Pakistan raised bond yields to 11.5 percent in an attempt to stabilize the market, curb capital outflows, and restore investor confidence amid growing currency pressures.
Data shows that British investors led the exit, followed by significant withdrawals from investors in the United Arab Emirates and Bahrain.
Analysts warn that continued capital flight could trigger higher interest rates, currency depreciation, and reduced foreign investment in Pakistan’s productive and infrastructure sectors, deepening the country’s economic strain.