Pakistan’s power sector experienced the highest net outflow by foreign investors in March 2025, amounting to $77.87 million, according to the latest data from the State Bank of Pakistan. This significant divestment is seen against the backdrop of longstanding challenges in the sector, particularly mounting circular debt and delays in capacity payments to Independent Power Producers (IPPs). Despite contractual protections under the 1994 and 2002 power policies, which had originally spurred foreign investment in power generation, persistent payment bottlenecks and fiscal stress have increased investor caution.
The Communications and Mining & Quarrying sectors also saw net outflows in the month, standing at $6.61 million and $2.93 million, respectively. In contrast, the Financial Business sector stood out as the top recipient of foreign direct investment (FDI) in March, with net inflows of $51.99 million. Investor confidence in this segment remains strong due to profitability in banking and insurance and momentum in digital financial services.
Over the first nine months of the fiscal year (9MFY25), total FDI reached $1.64 billion, reflecting a moderate increase from $1.44 billion in the same period last year. The Financial Business sector led with $518.38 million in net inflows, up from $464.78 million in 9MFY24. The power sector followed with $500.32 million in net FDI, a substantial increase from $342.52 million recorded a year earlier. This suggests that while March saw short-term withdrawal, long-term capital commitments in energy remain intact. The Oil & Gas Exploration sector secured the third-highest FDI at $216.93 million during 9MFY25, up 4.97 percent year-on-year.
The Communications sector, however, emerged as the biggest net loser in the cumulative period, with a divestment of $64.46 million in 9MFY25 compared to $22.78 million in the same period last year. Other sectors that recorded notable divestments included Transport Equipment (Automobiles), which shifted from a $17.12 million inflow in 9MFY24 to a $15.86 million outflow this year, and the broader Transport sector, where divestment stood at $15.47 million.
Overall, FDI into Pakistan in March 2025 totalled just $25.75 million, a sharp drop from $294.17 million in March 2024 and from $385 million in February 2025. The monthly volatility in investment flows underscores the growing importance of regulatory stability and macroeconomic reform in shaping foreign investor sentiment. As Pakistan prepares for fresh IMF talks and potential restructuring in the power and SOE landscape, foreign investment trends remain closely tied to policy clarity and fiscal discipline.
