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Foreign Direct Investment Falls By 32.5% In 10 Months

Foreign direct investment (FDI) has kept falling during the current fiscal year as it declined by 32.5 percent to $1.55 billion during the first 10 months (July-April), reflecting no improvement in the situation for investors.

According to State Bank of Pakistan (SBP) data, during the first ten months of the current fiscal year, FDI dropped to $1.55 billion as compared to $2.30 billion reported in the corresponding period of the last financial year.

On a month-on-month basis, FDI decreased by 5.5 percent as it remained $158.4 million in April 2021 as compared to the net inflows of $167.6 million received in March 2021. However, it surged by 4.9 percent on a year-on-year basis against the net inflows of $151.1 recorded in April 2020, as per data compiled by the State Bank of Pakistan (SBP).

During the month of April, the foreign private investment into the country amounted to $143.4 million, wherein $158.4 million was attributed to direct investments, while disinvestment of $15 million was attributed to equity securities i.e. a part of portfolio investments. Within the direct investments, there was an inflow of $237.6 million and an outflow of $79.2 million during the month.

All in all, the foreign investments in Pakistan during the month amounted to $2.61 billion, showing a nine-fold increase on a sequential basis when compared to net inflows of $287.4 million recorded in March 2021.

It is pertinent to mention here that FDI fell by 35.1 percent to $1.395 billion during July-March FY21 compared to $2.15 billion in the same period of the last fiscal year.

However, the situation on external front is much better as the current account of ten months of FY21 is surplus and the SBP reserves have reached a four-year high.

Exports have been increasing as more export orders are in line due to the serious pandemic situation in India and Bangladesh. The increased export proceeds and lower consumption of foreign exchange in the domestic market raised the value of Pakistani rupee against US dollar as it has appreciated by 9 percent since August 2020.

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Naya Daur