KARACHI, Nov 20: Pakistan attracted only $150.5 million worth of total foreign investment between July-October this year down 63 per cent from $406.6 million it had received in July-October 2002.
The country received $170.3 million foreign direct investment in first four months of this fiscal year against $402 million in a year-ago period. But the inflow of total foreign investment declined to $150.5 million because there was a net outflow of $19.8 million portfolio investment.
According to the latest State Bank statistics available on its website total investment from the UK touched the rock bottom of $18.4 million in the four months to October this year from $162.8 million in a year-ago period. Total investment from the US fell to $77.5 million from $89 million whereas investment from the UAE plunged to just $22.4 million from $82.6 million.
This huge fall in the total foreign investment may take a toll on Pakistan’s balance of payments if the declining trend may continue through the rest of this fiscal year. Workers’ remittances or the money sent back home by overseas Pakistanis has already been on the fall though these are still in line with the target set by the government for fiscal year 2003-04.
Pakistan had attracted net total foreign investment of $534 million in the last fiscal year with a record inflow of $798 million direct investment. What had reduced this figure was a negative portfolio investment of $237 million.
Foreign investment forms part of the capital account in the balance of payment which has remained negative not only in the last fiscal year but also in the preceding year. In July/June 2002/03 capital account saw a net outflow of $653m down from $ minus 1.1bn in the preceding year.
Workers’ remittances, on the other hand, are part of current account that saw a record surplus of $4.02 billion in the last fiscal year up from $2.83 billion a year earlier.
What had enabled Pakistan to post a huge $4.02 billion current account in July/June 2002/03 was primarily a record $4.2 billion earning through workers remittances. This year the government has reduced the target for these remittances to $3.6 billion and in the four months to October 2003 the country has received $1.235 billion in workers’ remittances which means that these would not surpass the target.
Obviously then the current account surplus would shrink this year. The current account will also come under pressure because the country may have to import wheat this year.
Initially the government plans to import half a million tonnes but indications are that this amount may have to be doubled if the revised estimates of wheat production show further decline.