Foreign investment falls eight per cent

Drop in foreign direct investment of 27% caused overall decline.

KARACHI:

Foreign investment in Pakistan fell 8.1 per cent to $1.92 billion in fiscal year 2010-11 because of a decrease in foreign direct investment, the central bank said on Thursday.

Foreign investment totalled $2.09 billion in fiscal 2009-10. Foreign direct investment fell 26.8 per cent in the July-June period to $1.57 billion from $2.15 billion in the same period last year, the State Bank of Pakistan said.

Unstable security situation and acute power shortages have put off long-term investors, analysts say. However, with emerging markets increasingly on the radar of fund managers, the country has seen a flow of foreign investment in the main stock exchange.

Foreign portfolio investment rose 634 per cent to $344.4 million in 2010-11, compared with an outflow of $64.5 million the previous year.

The country has faced economic slowdown and took an International Monetary Fund (IMF) emergency loan package in November 2008 to avert a balance of payments crisis and shore up reserves.

It received the fifth tranche of $1.13 billion of the $11.3 billion loan in May 2010. The government and IMF authorities are due to meet this month to discuss the possible release of the next tranche.

Published in The Express Tribune, July 15^th, 2011.