Foreign investment totalled $1.847 billion in the same period last year.

Foreign direct investment fell 29.7 percent in the July-May period to $1.392 billion from $1.981 billion in the same period last year, the State Bank of Pakistan (SBP) said.

Unstable security, a Taliban insurgency in the country's northwest and chronic power shortages have put off long-term investors, analysts say.

However, with emerging markets increasingly on the radar of fund managers, Pakistan has seen a flow of foreign investment in the country's main stock exchange.

Foreign portfolio investment rose 359.6 percent to $347.1 million in the first 11 months of 2010/11, compared with an outflow of $133.7 million in the same period last year.

Pakistan has struggled with a troubled economy and an International Monetary Fund (IMF) emergency loan package agreed in November 2008 helped it avert a balance of payments crisis and shore up reserves.

It received the fifth tranche of $1.13 billion of the $11 billion loan in May 2010. Pakistan and IMF authorities are due to meet in July to discuss the possible release of the next tranche.

Copyright Reuters, 2011