Pakistan has experienced a 19% decline in total foreign investment during the first nine months of the current fiscal year, according to the latest data released by the State Bank of Pakistan (SBP).
While overall foreign investment contracted, foreign direct investment (FDI) showed moderate growth. The SBP reported that FDI rose by 14%, reaching $1.64 billion between July and March, compared to $1.44 billion in the same period last year.
In contrast, foreign portfolio investment (FPI)—which includes investments in equities, bonds, and other securities—registered a sharp decline. FPI plummeted by 514%, as foreign investors sold off $269 million worth of Pakistani equity and debt instruments during the reporting period. By comparison, foreign investors held $65 million in such assets during the same period last year.
To address the widening external financing gap, Prime Minister Shehbaz Sharif has directed his administration to increase exports to $60 billion over the next five years in a bid to bolster foreign exchange reserves.
Despite these efforts, the country’s foreign reserves fell to $10.6 billion as of the week ending April 11, according to SBP figures. This amount is only sufficient to cover approximately two months of imports, while the International Monetary Fund (IMF) recommends reserves adequate to cover at least three months of import payments.
