KARACHI, June 30: The fiscal year 2006-07 ended with a record portfolio investment reaching close to one billion dollars, providing the government with some more numbers to present as a proof of its successful economic management.

The State Bank on Saturday issued figures of share purchase and sale through the special convertible rupee account (SCRA). The portfolio investment through SCRA reached $978 million on the last session held on June 29.

Over $228 million alone came in June, leaving hope for more investment in the coming days, with good possibility of high economic growth in the country.

The inflow of foreign exchange from all sources crossed all estimates or forecasts made by the government or by the private sector analysts. All types of foreign exchange inflows set new records during 2006-07.

The foreign direct investment could reach over $5.2billion by the end of the year, while remittances coming through overseas workers could reach $5.5 billion.

During July, FDI reached $4.5 billion, and in the same period workers remittances reached $4.985 billion

Analysts said if economic growth continues to show strength it exhibited during the last four years, the inflows, including SCRA, could set new records for new fiscal 2007-08.

They said enlistment of more attractive companies, like Habib Bank, would accelerate the pace of forex inflow through the portfolio investment.

“The booming business in the telecommunications and financial sectors has created greater economic activities and enhanced hope that the country may achieve the economic targets set for the new fiscal,” said Abid Salee, an analyst.

However, the pressure of widening trade deficit is still mounting on the government. Economists and analysts have been warning the government not to rely on ‘highly unreliable’ foreign inflows.

“Foreign inflows in financial and telecommunications sectors would continue to come in the next two to three years, but the portfolio investment is unpredictable as it has stronger relation with the speculation rather than solid economic growth,” said Abid.

The country’s law allows foreign investors to take back 100 per cent investment made in any sector which is an attraction for foreign investors as it reduces risk while the country has to take all risks of sudden erosion of foreign investment. The worst scenario of foreign investment erosion was witnessed in mid-1990s when the Far-Eastern economies collapsed.

Another figure of the SBP showed that from the first week of January till mid-June 2007, the net amount of shares still lying with the foreign investors was to the tune of Rs35.788 billion.