—Total foreign investment declines by 60.1pc to $254.3m
KARACHI: The direct investment in the country has declined by 42 per cent in the first quarter (Q1) (July-September) of the fiscal year 2018-19 and stood at $439.5 million as compared to $762.2 million in same period last year – a difference of $325.7 million, said a report issued by the State Bank of Pakistan (SBP) on Thursday.
In September 2018, the country had received $151.3 million only under the head of direct investment as compared to $195 million in received in the same month last year, the report noted. The total investment stood at $254.3 million after declining 60.1 per cent during the same period.
Moreover, the country received inflows of foreign direct investment to the tune of $610.4 million in last three months, while investors pulled back $170.9 million during the same period, according to the data released by the SBP.
According to analysts, the overall situation of the economy is not good in the country which is evident from the fact that the stock market lost between 2,000-3,000 points in last 15 days. They further predicted that the foreign investment may likely be at the lower side during the next few months.
The market analysts further said that the federal government has raised the gas charges and the regulatory duty on the import of 570 products, which will further hamper the country’s growth.
Furthermore, the foreign private investment of the country stood at $254.2 million, down by 63 per cent during July-September, compared to $687 million in the same period last year.
During the first quarter of 2018-19, the SBP has recorded outflows of $185.3 million in the head of portfolio investment (equity securities), down by 137 per cent compared to last year’s outflows of $78.2 million in the same period.
During the period, the SBP received an amount of $0.1 million in the head of foreign public portfolio investment (debt securities), an increase of 100 per cent during the first quarter of the current fiscal year, the data said.
The Chinese companies under the China Pakistan Economic Corridor (CPEC) invested an amount of $281 million during July to September, while the United Kingdom invested $51.2 million and Switzerland $39.6 million in Pakistan.
Major investments the country received were from USA ($25.2 million), Singapore ($16.5 million), Italy ($12.4 million) and Japan ($15.7 million) in different sectors. Meanwhile, Norway, Kuwait and Netherlands pulled back their investment from Pakistan during the same period.
The country received an investment of $189.3 million in the construction sector, $85.9 million in the manufacturing sector, $74.2 million in electricity, gas, steam and air conditioners, and $24.3 million in financial and insurance sector.
Outflows of $31.43 million were recorded in the information and communications sector, $18.1 million in accommodation and food services and $0.2 million in real estate activities.
Pakistan received an amount of $4.977 billion in the last fiscal year (2017-18) compared to $2.496 billion in 2016-17.
After touching the highest level of $24.6 billion in May 2017, the forex reserves declined to below $14.613 billion on October 12, 2018.
The present economic condition of Pakistan is precarious and resulted in the government approaching International Monetary Fund (IMF) to end its cash crunch.
However, just a day ago, Prime Minister Imran Khan said that Pakistan might not have to approach the IMF for loans. In a meeting with journalists, the prime minister expressed hope that the government will be able to fix economic issues soon with its policies.
The government is also in contact with friendly countries for resolution of economic issues, he said.
The government recently announced its decision to approach IMF amid severe criticism from the opposition for taking a U-turn on the issue.
However, according to a British media report, one of the possible reasons for PM Khan not approaching IMF can be the country’s dependence on Saudi Arabia. Pakistan is holding talks with the kingdom over this matter and investments in big power projects were also being discussed, the report added.
During the last federal cabinet meeting held on October 11, the premier directed the Ministry of Finance to hold a thorough probe into the loans taken by the former governments in the past ten years and their utilisation.