October 07, 2008

Pakistan FDI in 9 months dips by 46% YoY

The News reported that Pakistan’s foreign investment recorded a significant drop of 46% YoY during July 2007 to March 2008 period as compared to July 2006 to March 2007 period. The foreign investment remained in a narrow band, even after democracy was restored in Pakistan through general elections on February 18th 2008.

The current statistics of State Bank of Pakistan showed that in March 2008, Pakistan attracted only USD 300 million foreign investments. This is less than the expectations of economic experts, who were predicting much more investment under a democratic government. However, economists are confident that in the remaining three months of the current fiscal year, overall investment would grow robustly due to the issuance of global depository receipts of National Bank of Pakistan and some other companies.

As per official statistics of State Bank of Pakistan, during July 2007 to March 2008 period, net foreign investment stood at USD 2.98 billion as compared to USD 5.55 billion in July 2006 to March 2007 period.

It seems that foreign investors are still reluctant to invest in Pakistan, despite the fact the election process has been smoothly completed without any problems. The new government has taken charge and the law and order situation is improving gradually. Major decline was recorded in portfolio investment, which fell by 103%, with a decrease of USD 53 million as compared to an investment of USD 1.69 billion.

Analysts were of the view that the current growth in foreign investment was not sufficient to meet the expanding current account deficit of USD 11 billion and the government would be compelled to rely on international debt.