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Pakistan's FDI Falls 35 % In Nine Months

The FDI had dropped by 30 per cent during the first eight months of the current fiscal, and due to the 40 per cent decline recorded last month, it has now fallen by 35 per cent after nine months

Photo Credit : Bloomberg

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Cash-strapped Pakistan’s foreign direct investment (FDI) has fallen by 35 per cent at the end of the third quarter of the current fiscal year, reflecting no improvement in the situation for investors, according to the State Bank of Pakistan.

As per the data provided by the central bank, the FDI fell by 35.1 per cent to USD 1.395 billion during July-March compared to USD 2.15 billion in the same period of last fiscal.

The data says that FDI inflow in March was just USD 167.6 million compared to USD 278.7 million in the same month of last year — a decline of 40 per cent.

The FDI had dropped by 30 per cent during the first eight months of the current fiscal, and due to the 40 per cent decline recorded last month, it has now fallen by 35 per cent after nine months, it said.

The FDI has kept on declining in the fiscal year and has reflected no improvement in the situation for investors, the State Bank of Pakistan said.

However, the position on the external front is much better as the current account of eight months of FY21 is surplus with USD 881 million and the SBP reserves have reached a four-year high, the bank said.

The exports have also improved as more export orders are in line due to the serious pandemic situation in India and Bangladesh, it said, adding that this has helped the Pakistani rupee gain ground against the US dollar and has appreciated by 9 per cent since August 2020.

A financial expert said the FDI fall was not surprising given the COVID-19 situation affecting the global market and there is nothing new to attract foreign investors in Pakistan.

He said the main inflow of the FDI is still coming from the China-Pakistan Economic Corridor projects and the data shows that inflow from China during the nine months of this fiscal was USD 650.8 million, constituting 46 per cent of the total inflows so far.

China has been the largest investor in Pakistan for several years, but the inflow declined this year. In the same period of last fiscal, the inflow from China was USD 859.3 million; the decline this year was 24 per cent. 

(PTI)