By Shahzad Anwar
KARACHI: Foreign investment recorded a significant drop of 46 per cent during the first nine months (July-March 2007-08) of the current fiscal year, compared to the same period of the last fiscal year.
The country attracted an all-time high foreign investment during the same period of fiscal year 2006-07. The foreign investment remained in a narrow band, even after democracy was restored in the country through general elections on February 18.
The current statistics of State Bank of Pakistan (SBP) showed that in March 2008, Pakistan attracted only $300 million foreign investment. This is less than the expectations of economic experts, who were predicting much more investment under a democratic government.
However, economists are confident that in the remaining three months of the current fiscal year, overall investment would grow robustly due to the issuance of Global Depository Receipts (GDR) of National Bank of Pakistan (NBP) and some other companies.
As per official statistics of SBP, during July-March 2007-08, net foreign investment stood at $2.98 billion compared to $5.55 billion in the same period of the last fiscal year. This meant that foreign investment dropped by $2.57 billion during the first nine months.
It seems that foreign investors are still reluctant to invest in Pakistan, despite the fact the election process has been smoothly completed without any problems. The new government has taken charge and the law and order situation is improving gradually.
Major decline was recorded in portfolio investment, which fell by 103 per cent, with a decrease of $53 million during the first nine months of the current fiscal year, compared to an investment of $1.69 billion during the corresponding period of fiscal year 2007-08.
Analysts were of the view that the current growth in foreign investment was not sufficient to meet the expanding current account deficit of $11 billion and the government would be compelled to rely on international debt.
“We are expecting that at the end of current fiscal year, overall investment would reach near $4 billion, as presently the average quarterly foreign investment stood at one billion dollars,” stated an economist. However, he said that if the GDR of NBP and other private companies is issued, then overall foreign investment could cross $5 billion mark by the end of June 2008.
Source: The News, 22/4/2008