KARACHI: Foreign Direct Investment (FDI) plunged 45 per cent year-on-year during the first month of fiscal year 2018-19, the State Bank of Pakistan reported on Friday.

The country received a total of $128 million in FDI during July compared to $233.8m same month last year. Political uncertainty, at its peak during July, seemed to have barred foreign investors from entering into Pakistan.

The report also indicates that, during the month under review, China reclaimed its top spot as the leading investor in Pakistan with total investments rising by $1.1m reaching $74.5m from last year’s $73.4m. China’s share in total FDI reached to 58.2pc during July this year. The Chinese inflows mostly came under the umbrella of China-Pakistan Economic Corridor related projects.

Britain followed behind China at $22m while $16.5m came from United States. On the other hand, amongst those who pulled their money from Pakistan, Kuwait was at the top taking away $20m in July.

Pakistan’s total inflows during FY18 clocked in at $2.76 billion which was relatively higher than FY17 tally.

The report shows that the country’s portfolio investments registered an outflow of $42m in July bringing the overall foreign investments down to $86m. Relatively, the amount dwarfs the foreign investment of $223m in July FY18. Similarly, the outflow of portfolio investment was almost zero in July FY18.

Post-elections scenario has remained relatively optimistic so far as seen in the 25pc jump in inward remittances during July and rupee’s appreciation of 4pc against the greenback. However, slump in FDI has raised alarm bells for the country as the new government takes reins of the economy.

Pakistan has been relying heavily on remittances and foreign borrowings to fill the widening current account deficit. The caretaker government and State Bank took a number of steps to restrict the surging imports, in a bid to reverse the record high current account deficit of $18bn reported in FY18.

Published in Dawn, August 18th, 2018