KARACHI, Aug 18: Net investment into Pakistan rose to minus $29.031 billion at end-December 2004 from minus $28.259 billion at end-December 2003, showing a deterioration of $773 million in its net international investment position within a year. Net international investment is arrived at by subtracting the stock of foreign debts and international foreign exchange liabilities from the stock of reserves and international forex assets.
The net international investment position indicates healthiness or otherwise of a country’s external sector without making a reference to its external trade. According to State Bank statistics released earlier this week, the net investment position of Pakistan stood at minus $29.031 billion at the end of 2004, as its liabilities of $46.026 billion exceeded the assets of $16.995 billion.
The break-up of the liabilities show that at the end of last year, Pakistan was carrying $34.161 billion worth of foreign loans and non-residents had $1.165 billion worth of foreign currency deposits in this country. Besides, the stock of foreign direct investment into Pakistan stood at $82.18 billion and that of portfolio investment at $1.805 billion.
Central bankers say all foreign investment, which is equal to less than 10 per cent of the total equity of the recipient institution, is classified as portfolio investment whereas investment more than this is classified as foreign direct investment (FDI).
The break-up of the assets show that at the end of 2004, Pakistan had $10.823 billion worth of foreign reserve assets and its investment abroad stood at $5.324 billion, including $2.284 billion worth of foreign currency deposits placed overseas.
At the end of 2003, the net international investment position of Pakistan was minus $28.259 billion, as its international foreign investment liabilities of $44.304 billion had exceeded the assets of $16.046 billion.
Whereas Pakistan saw deterioration in its net international investment position in 2004, India saw an improvement in its own position.
The end-2004 data on India’s net international investment position are not available, but in the year to March 2004, India’s position was minus $48.6 billion, showing an improvement over the March 2003 position of minus $60.64 billion.
According to data released by the Reserve Bank of India, the country’s international investment liabilities stood at $184.58 billion at end-March 2004, whereas its assets totalled only $135.98 billion. At end-March 2003, India’s liabilities were at $155.38 billion, but its assets were only $94.74 billion.
Like in Pakistan, foreign debts of India at $62.62bn at end-March 2004 made up the bulk of its international investment liabilities. At end-March 2003, however, the debt stood at $61.1 billion.
This means that India’s foreign debt in the year through March 2004 rose by $1.52 billion or 2.5 per cent. On the contrary, Pakistan’s foreign debt in the year 2004 rose by $333 million or less than one per cent to $34.161 billion from $33.828 billion.
Similarly, in the year to March 2004, the stock of foreign direct investment into India went up from $30.83 billion to $38.68 billion, showing an increase of $7.85 billion or more than 25 per cent. On the other hand, the stock of FDI into Pakistan grew by $1.135 billion or more than 16 per cent to $8.218 billion at the end of 2004 from $7.083 billion at the end of 2003.