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KARACHI: Foreign Direct Investment (FDI) witnessed negative growth and declined by two percent during the first nine months of this fiscal year (FY22).

The State Bank of Pakistan (SBP) reported on Tuesday that Pakistan fetched FDI amounting to $1.285 billion during July-March of FY22 as against $1.311 billion in the same month of the previous fiscal year (FY21), showing a decline of $26 million. During the period under review, overall FDI inflows were $1.967 billion against $682.4 million outflow.

The detailed analysis revealed that although overall FDI from China fell sharply 48 percent during the period under review, it still has the largest 26 percent share in overall FDI this fiscal year. Highest FDI amounted to $333.5 million was arrived from China during the first nine months of this fiscal year as against $641 million in corresponding period of last fiscal year.

The United States ranked second with $183 million direct investment during the July-March of FY22 as against outflow of $34.3 million in the same period of last fiscal year. Investors from Hong Kong invested $133 million, Switzerland worth $107 million, UAE $101 million and Malta amounted to $71.5 million during the period under review.

Jul-Feb FDI rises 6pc to $1.257bn YoY

During the first nine months of this fiscal year, major investment poured into the Power sector amounted to $489 million followed by the Financial Business Sector $323 million and Oil and Gas Exploration worth $180 million.

The portfolio investment also registered a downward trend with an outflow of $341.7 million during July-March of FY22. While, foreign public investment rose to $502.6 million in the first nine months of this fiscal year.

According to SBP, total foreign investment in Pakistan, comprising foreign direct investment, portfolio investment and foreign public investment mounted up by 38.4 percent or $401.2 to $1.446 billion in July-March of FY22 compared to some $1.045 billion in the same period of FY21.

Month-on-month basis, foreign direct investment during Mar 2022 witnessed net outflow $30 million compared to net inflow of $173 million during Mar 2021. The country witnessed net outflow after Nov 2020.

Presently, the country’s foreign exchange reserves are depleting and declined to $17.28 billion including $10.849 billion of SBP and $6.178 billion held by commercial banks. Therefore, the country needs huge foreign inflows to build the depleting the foreign exchange reserves.

Copyright Business Recorder, 2022

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