ISLAMABAD, Nov 24: Pakistan has been assured by the Belgian Prime Minister Guy Verhofstadt of increased trade and economic cooperation including insurance cover for western investors to invest in the country.

Official sources said that during the meeting between the Belgian prime minister and the ministers for finance, trade and Kashmir Affairs on Saturday issues relating to better trade and economic ties were discussed.

The Belgian premier and President of the European Commission Romano Prodi were briefed about various problems Pakistan was currently facing specially enhanced war risk charges and matters pertaining to re-insurance for Pakistani exports.

Pakistan side also raised the issue of getting insurance cover restored for European investors. They were told that the US Overseas Private Insurance Corporation (OPIC) has restored this cover for American investors and that now EU should also follow the suit in order to help increase foreign investment in Pakistan.

There had been marginal foreign investment during the last few years but eversince US and EU withdrew insurance cover following Islamabad’s decision to go nuclear in May 1998, individual investors and multinationals preferred to go to other countries of the region for investment purposes.

“But this situation will now change as we have been given assurances of restoring this insurance cover for western investors,” a source said.

He said that foreign investment was an area where the present government did not achieve any success. “Foreign investment is a very important element to determine overall GDP growth rate and we will have to work very hard on this issue,” he said adding that September 11 events have made Pakistan closer to the US and EU which will go a long way in improving the country’s economy.

According to the State Bank’s Annual Report 2000-2001, Foreign Direct Investment (FDI) registered a 31 per cent decline, which is very disappointing compared to inflows of 472 million dollars last year. Although the financial year 2000-2001 provided better investment climate than the year before, in terms of the Standby Arrangement (SBA) and an amiable settlement of the longstanding dispute with Hubco, this could not translate into higher FDI. Outflows under portfolio investment declined to 149 million dollars in 2000-2001 as against 549 million dollars in 1999-2000. Project aid, which is a part of long term capital flows, further dipped to 785 million dollars in 2000-2001, a manifestation of the drying up of pipeline aid following the international sanctions on Pakistan, which prevented new commitments from major donors.