Dubai: The UAE has emerged as the largest Gulf investor in Pakistan’s government bonds, pumping $130 million (Dh477 million) into the country’s domestic debt market in just nine days of October, according to the latest figures from the State Bank of Pakistan (SBP).
The investment highlights growing interest from Gulf countries in Pakistan’s government securities, particularly longer-term bonds offering attractive returns.
According to SBP data, Pakistan attracted $188 million (Dh690 million) in foreign investment in treasury bills (T-bills) and Pakistan Investment Bonds (PIBs) between October 1 and 9.
Of this amount, the UAE accounted for $130 million, including $80 million in long-term PIBs and $50 million in short-term treasury bills.
Bahrain was another major Gulf investor, contributing $40 million during the same period, including $30 million in PIBs and $10 million in T-bills.
Together, the UAE and Bahrain accounted for $170 million, or more than 90 per cent of the total foreign investment recorded during the nine-day period.
Investment in Pakistan
The latest figures indicate sustained interest from UAE-based investors in Pakistan’s domestic debt market.
In September, the UAE invested $110 million in PIBs and another $5 million in treasury bills. Bahrain invested $10 million in PIBs and $14 million in T-bills during the same month.
The growing investment from Gulf countries is particularly significant for Pakistan, which has been seeking additional sources of foreign exchange to strengthen its reserves and support economic stability.
Since the beginning of the current fiscal year on July 1, foreign investment in Pakistan’s government securities has reached $656 million, comprising $404 million in PIBs and $252 million in treasury bills, Dawn online reported.
During the first nine days of October, foreign investment outflows stood at $38.16 million, considerably lower than the $188 million in fresh inflows.
Why are Gulf investors interested?
Financial experts believe several factors could be encouraging investors from the UAE and other Gulf countries to explore Pakistan’s government bonds.
One possible reason is the relatively attractive returns offered by Pakistan’s domestic debt instruments.
Some analysts also believe Pakistani expatriates living and doing business in Gulf countries may be shifting part of their savings into Pakistan’s government securities to benefit from higher yields.
Others point to regional economic uncertainty linked to the ongoing US-Israel-Iran conflict, which has disrupted trade and raised concerns about investment conditions across the region.
However, experts caution that investments in Pakistani government securities remain relatively small compared with the overall investment capacity of Gulf countries.
Government bonds also carry risks, including currency fluctuations and changes in market conditions, despite being backed by the government.
What does it mean for overseas Pakistanis?
The trend could create opportunities for overseas Pakistanis, particularly those living in the UAE, Saudi Arabia, Bahrain and other Gulf countries, who are looking to invest their savings back home.
Pakistan has traditionally relied heavily on remittances from its expatriate population to support foreign exchange inflows.
The country received a record $41.5 billion in workers’ remittances during the 2025-26 fiscal year, while remittances are projected to reach $44 billion in FY27.
However, weak export growth and a widening trade deficit have increased the importance of attracting other sources of foreign currency.
Investment in government bonds could supplement remittances, although analysts say investor confidence and the country’s ability to maintain adequate foreign exchange reserves remain important.
Experts see positive signs
Money market expert S.S. Iqbal said the increasing investment in government securities was an encouraging development.
“Most of the maturing amount is being reinvested in domestic bonds, with a small additional amount. However, the sign is good that domestic bonds are attractive and the Gulf countries could see this opportunity as a good option,” he said.
Iqbal suggested that the government should make its securities more attractive to Gulf investors.
He also stressed the importance of building Pakistan’s foreign exchange reserves to strengthen investor confidence.
Long-term investment
Pakistan is promoting longer-term investment bonds to reduce the need for frequent repayments associated with short-term borrowing.
Analysts believe sustained participation by Gulf investors, including overseas Pakistanis, could help the government broaden its investor base and secure more stable financing.