KARACHI: Foreign direct investment (FDI) during the first seven months of the this fiscal year dropped 3 per cent on a year-on-year basis.

The State Bank of Pakistan (SBP) reported on Thursday that the country received a total FDI of $1,488 million during July-January period of 2017-18.

The FDI fell despite a healthy economic growth as reported by the Ministry of Finance and the central bank. The SBP expects a 5.8pc growth rate in FY18, indicating that domestic investment has increased substantially to achieve about 6pc economic growth target.

The Chinese investments totalled $1,003.3m constituting 67.4pc of the total FDI the country received during the period under review suggesting that investments from other countries had been declining.

$1.5bn paid in debt servicing during the second quarter of 2017-18

The second largest inflow was noted from Malaysia, accounting for an investment of $118m. Inflows from UK and USA stood at $94.3m and $75.5m respectively.

Power sector captured the lion’s share of foreign investment worth $542m during the July-January period, pointing to the focus of Chinese investment in Pakistan. It also indicated that the highest amount of $415m was invested in coal power plant.

The report also shows that the construction industry still has a great potential for foreign investments as the sector attracted second largest share , amounting $385m, during this period.

Financial businesses received $178m, oil and gas exploration $120m, trade $55m and food $24m during this period.

Since the portfolio investment has improved, the total foreign private investment (FPI) between July-June increased by 23.3pc to $1454m. The outflow of portfolio investment was just 34m during this period compared to a total outflow of $353m in the corresponding period of FY17.

Debt servicing

Meanwhile, the country paid $1.523 billion in external debt servicing for the second quarter of this fiscal year, the State Bank reported on Thursday.

Of this, $599 million was paid as interest, and $924m as repayment of principal. The overwhelming majority of these payments were on public debt, coming in at $1.227bn.

Private sector debt payments stood at $211m. The remaining $72m was paid by public sector enterprises.

The figures show a drop from the preceding quarter when the government paid $2.102bn as total external debt servicing.

Published in Dawn, February 16th, 2018