KARACHI, Pakistan news: Net foreign investment in Pakistan fell 22 percent to $1.73 billion in the first 10 months of the 2009/10 fiscal year, compared with $2.21 billion in the same period last year, the State Bank of Pakistan (SBP) said on Monday.
Out of total foreign investment, foreign direct investment fell 44.7 percent to $1.77 billion in the July to April period, from $3.20 billion in the year-ago period, the State Bank said.
A worsening security situation, with a Taliban insurgency in the country’s northwest, coupled with chronic power shortages, have put off investors, analysts say.
There was a net outflow of $46.6 million of foreign portfolio investment in the first 10 months of this (July-June) fiscal year, compared with a net outflow of $992.6 million in the same period last year.
Authorities imposed a floor on the Karachi Stock Exchange benchmark index in August 2008 as political uncertainity and economic and security worries drained investor confidence.
The floor discouraged new investment and also led to a sharp outflow of funds, as foreign investors sold holdings in off-market trade.
The floor was removed in December 2008.
An International Monetary Fund (IMF) emergency loan package of $7.6 billion agreed in November 2008 helped avert a balance of payments crisis and shore up reserves.
The IMF increased the loan to $11.3 billion in July and approved the fifth tranche of $1.13 billion on May 14.
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