Net FDI in Pakistan falls over 52% in first four months of FY23

Net Foreign Direct Investment (FDI) in Pakistan dropped 52.1% during the first four months of the ongoing fiscal year (FY23), clocking in at just $348.3 million, revealed State Bank of Pakistan (SBP) data on Monday.

During July-October FY23, FDI inflows were $514.5 million against outflow of $166.2 million.

Net FDI during the same period (July-October) of the previous fiscal year amounted to $726.5 million — a decline of $378.2 million.

During October alone, net FDI amounted to $94.9 million, a 62% decrease when compared with the same month of the previous year i.e. $247.3 million.

On a month-on-month basis, FDI was up 13%, in comparison to $84 million clocked in September.

Meanwhile, during four months of FY23, overall Chinese investment in the country declined sharply by 27%. However, China still remained the largest investing country, accounting for 14.5% of the total share with net FDI of $74.8 million compared with $102 million during the same period last year.

The UAE emerged as the second-largest investor with a net FDI of $69 million, compared with $54 million during the same period last year, an increase of 27.7% and accounting for 13% of the total share.

During 4MFY23, energy sector attracted the major share of investment i.e. 30% ($155.5 million) followed by financial business sector ($97.5 million) and oil & gas explorations ($18.5 million).

The development comes at a time when the country faces a shortage of dollars as it makes efforts to increase foreign exchange reserves through non-debt-creating inflow.

While Pakistan has recently received some $1.5 billion inflows from the Asian Development Bank and the World Bank also announced a $1.3 billion package for the country, investments remain elusive.

Meanwhile, Pakistan’s current account deficit (CAD) shrank by 46.8% during the first four months of this fiscal year (FY23) due to a lower import bill and marginal increase in exports, SBP said on Monday.