ISLAMABAD: Foreign Direct Investment (FDI) in Pakistan decreased by almost 29% in April and 23% in the first 10 months of the current fiscal year.
This decline in FDI, combined with a 13% drop in remittances from overseas Pakistanis, poses a serious risk to Pakistan’s ability to meet its external obligations as it faces a default-like situation due to falling foreign exchange reserves.
The State Bank of Pakistan (SBP) reported that FDI in April was $121.6 million compared to $170.6 million in the same period last year. Financial sector experts attribute this decline to persistent political instability that has shaken the confidence of foreign investors in Pakistan.
China remains Pakistan’s biggest investor, but its investment decreased to $348 million in 10MFY23 from $403 million in the same period last year. Despite some investments from other countries like Japan and Switzerland, experts don’t anticipate any improvement in foreign inflows in the near future if the political crisis continues.
