Finance Minister Aurangzeb anticipates IMF loan agreement

Foreign investors have increasingly favored domestic bonds, particularly treasury bills, in the current fiscal year (FY24) due to attractive discount rates. In April 2024, foreign investments in treasury bills surged to $20 million, surpassing inflows seen in equities during the same period. From July to April 9 of this fiscal year, total T-bills inflows reached $183.6 million, with a notable portion coming in the latter half. Domestic financial institutions and the corporate sector have collectively injected around Rs4.8 trillion into government bonds. The cut-off yield for treasury bills has held steady at 22%, indicating no immediate signs of an interest rate cut. The recent uptick in foreign investment in treasury bills is attributed to the stability of the exchange rate market.

Equally noteworthy is the $360.6 million influx into the equity market during the July-April 9 period, sustaining the market at record levels. Despite this, international rating agencies have refrained from revising the country's rating upward since its downgrade at the beginning of the fiscal year. However, positive economic developments, such as ongoing discussions with the IMF for a long-term loan programme, could potentially attract more foreign investment into domestic bonds. Finance Minister Mohammad Aurangzeb has expressed optimism for a new loan agreement with the IMF, with another meeting scheduled for May this year.