Foreign direct investment (FDI) in Pakistan fell sharply by 28 percent to $1.08 billion during July-March period of the current fiscal year, according to the figures released by the State Bank of Pakistan (SBP) on Thursday.
In the same period last year, the country received $1.5 billion FDI, the figures showed. The net foreign investment saw a marginal decline by 0.3 percent to 1.318 billion dollars during the period under review against $1.321 billion in July-March FY10.
Analysts said that the foreign investment has been declining due to uncertain economic situation in the country. The slipping law and order situation, coupled with the deepening energy crisis impede foreign investment in the country, said Khurram Schehzad, analyst at Investcap Securities.
The International Monetary Fund (IMF) in its latest report on Pakistan also cited these problems and painted a bleak picture of economic reforms.
“Adverse security developments continue to hurt domestic and foreign investors’ confidence, while electricity shortages continue to prevent the economy from achieving its potential,” the IMF said in its report.
Major fall in the FDI was seen in inflows from developed countries as their investment plunged by 66 percent to $289.9 million during nine months of current fiscal year. Compared to the same period of previous fiscal year, the foreign investment by developed countries showed a decline of over 34 percent.
Among the developed countries, sharp decline was seen in inflows coming from Western Europe falling by 76.8 percent. The decline in investment from North America was 52 percent while from other developed countries, including Australia and Japan, the fall was 75.9 percent.
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