KARACHI: Foreign Direct Investment (FDI) plunged by almost 29 per cent year-on-year to $121.6 million in April and 23pc in the first 10 months of the current fiscal year.

At a time when Pakistan is facing a default-like situation due to falling foreign exchange reserves posing a serious risk to meeting its external obligations, the inflows (remittances) from overseas Pakistanis also shrank by 13pc during July-April 2022-23.

The State Bank of Pakistan (SBP) reported on Tuesday that the FDI in April was $121.6m against $170.6m in the same period of last year, a decline of 28.8pc.

However, the foreign invement dipped by 23pc to $1,170m in FDI during July-April 2022-23 compared to $1,523m it attracted in the same period of last fiscal year.

Financial sector experts see the persistent political instability has shaken up the confidence of foreign investors in Pakistan amid a year-long crisis year which crippled the economy and there is no chance of any improvement any sooner.

However, the SBP data showed that China was the biggest investor with $348m in 10MFY23 but the amount was less than last year’s $403m in the same period last year.

Islamabad heavily relies on Beijing for its foreign borrowings as China is the biggest trade partner of Pakistan.

Japan was the second with $162m FDI during July-April FY23. However, it was against a net withdrawal of $10m during the same period last year.

Australia withdrew $238.6m during the period under review.

Other impotent investors were Switzerland ($132m), UAE ($110m), the United States ($101m) and the Netherlands ($61m). Experts don’t see any improvement in foreign inflows in coming months particularly if the political crisis remains unresolved.

Published in Dawn, May 17th, 2023