By Staff Reporter
KARACHI: Foreign direct investment in Pakistan plunged 59 percent in the first six months of fiscal 2022/23 as the country’s economic crisis bit into capital inflows, according to data released by the central bank on Wednesday.
Pakistan attracted $461 million in FDI in the six months ending in December, the State Bank of Pakistan said. The report did not provide a comparative figure but the government reported last year that FDI in the same period of last fiscal year was $1.05 billion.
The country witnessed a net foreign outflow of $17 million in December.
The financial sector attracted $176 million in July-December FY2023, which was lower when compared with $230 million in the corresponding months of the last fiscal year.
The investment in the gas and exploration sector dropped to $89.2 million in July-December FY2023 from $138.9 million a year earlier. The investment in the power sector fell to $237 million from $345 million.
Analysts said dollar outflows and the deteriorating state of the economy have made the country one of the least desired moneymaking markets for foreign investors, with the repatriation of profits on foreign investments falling by 83.41 percent year-on-year in July-November of the current fiscal year 2022-23.
The central bank data showed paid profits from foreign investments in the country fell to $128.7 million in the first five months of FY23, down from $776 million reported in the corresponding fiscal year.
Pakistan’s economy is in virtual recession as the World Bank has projected growth of 2 percent, is about the same as population growth, for the current fiscal year, citing “precarious economic situation, low foreign exchange reserves and large fiscal and current account deficits” among the primary reasons.
There are also security concerns for investors as the country battles a Taliban insurgency in its northwest. There have been outflows from the stock market because of political uncertainty and economic and security worries.
Due to rapidly dropping foreign exchange reserves, a weakening rupee, and worsening macroeconomic indicators, Pakistan’s economy is currently in a severe crisis.
The International Monetary Fund (IMF) program’s delay, continuous political unrest, and Pakistan’s deteriorating external finances have all reduced international investors’ confidence in the country’s economy.
The situation worsened as a result of floods that inundated a third of the nation and cut its growth in half.
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