Net foreign investments decline by 19.7% in 2009-10

KARACHI: Net foreign investments in Pakistan fell 19.7 per cent to $2.14 billion in fiscal year 2009/10, compared with $2.66 billion the previous year, the central bank said.

Out of total foreign investment, foreign direct investment fell 40.7 per cent to $2.2 billion in the July to June period, from $3.72 billion the previous year, the State Bank of Pakistan said.

A worsening security situation, coupled with chronic power shortages, has put off investors, analysts say.

There was a net outflow of $64.5 million foreign portfolio investment in fiscal year 2009/10, compared with a net outflow of $1.05 billion the previous year.

Exchange authorities imposed a floor on the Karachi Stock Exchange benchmark index in August 2008 as political uncertainty and economic and security worries drained investor confidence. The floor was removed in December 2008.

An International Monetary Fund (IMF) emergency loan package agreed to in November 2008 helped Pakistan avert a balance of payments crisis and shore up reserves. It received the fifth tranche of $1.13 billion out of the IMF loan of $11.3 billion in May.

Published in The Express Tribune, July 16^th, 2010.