Dawn News

March, 27 2015
e-paper

Foreign investment declines by 60 per cent

KARACHI, June 15: While the fiscal year is coming to end the foreign inflows remained precarious putting more pressure on fast depleting foreign exchange reserves and destabilising the exchange rate.

The State Bank reported on Friday that the country could not come out from isolation as foreign investment fell by over 60 per cent during the eleven months of the current fiscal 2011-12. The inflows in May further fell to $126 million from $210 million in May last year.

The picture is bleaker for foreign direct investment (FDI) which fell by 48 per cent during the eleven months but more worrying is that most of the FDI was meant for oil and gas exploration.

During this period the foreign private investments were $721million while the FDI was $756 million; both remained much below than last year.

The country has been struggling to come out from internal as well as external pressure to get control over rising fiscal deficit which resulted into break-up of Standby Agreement with the IMF that compelled it to face a cut off like situation.

Since the supply cut to Nato in November 2011 for Afghanistan, Pakistan failed to make any financial deal with the any donor agency while the foreign investors started leaving Pakistan or reduced their operations in this country.

The details of foreign investments showed that most of sectors noted outflow form Pakistan while the limited inflows were mostly meant for oil and gas exploration or to support the existing operations.

The poor inflows badly hit the country’s forex reserves which fell by $3 billion during the eleven months and devalued the local currency by 4 per cent against the US dollar.

According to State Bank report about 70 per cent FDI came for oil and gas exploration during this period neglecting even the most attractive sectors like telecommunication, financial sector, transport and others.

Out of total FID $756 million, the oil and gas exploration attracted $526 million. The FDI for this sector was higher than the same period of last year. It was $432 million last year.

The telecommunication sector which has been the highest attraction for investors during the last decade, posted a net outflow of $346 million while only last year it received $78 million. Chemical sector  attracted $86 million, which was significantly higher than $36 million it received during the same period of last year.


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