Pakistani foriegn investment falls 28.9 pct

(For full coverage of Pakistan, click on [ID:nAFPAK]

KARACHI, Oct 16 (Reuters) - Net foreign investment in Pakistan fell 28.9 percent to $671.1 million in the first three months of the 2009/10 fiscal year, beginning on July 1, compared with $943.4 million in the same period a year earlier.

Out of total foreign investment, foreign direct investment (FDI) fell 58.5 percent to $463 million in the July to September period from $1.11 billion for the same three months last year, data posted on the State Bank of Pakistan's website (www.sbp.prg.pk) showed.

Foreign portfolio investment flows reversed, with a $208.1 million inflow in July to September compared with an outflow of $172.9 million in the same period last year.

Pakistani authorities imposed a floor on the Karachi Stock Exchange benchmark index in August of last year as political uncertainty, and economic and security worries drained investor confidence. The floor was removed in December.

The International Monetary Fund (IMF) saved Pakistan from a balance of payments crisis with a $7.6-billion emergency loan package in November last year. The loan was increased to $11.3 billion on July 31.

Pakistan's economy is in virtual recession as gross domestic product growth in the 2008/09 fiscal year of 2 percent is about the same as population growth. The IMF has projected GDP growth flat at 2 percent this fiscal year.

Security concerns posed by a Taliban insurgency based in the country's northwest and chronic power shortages have also put off investors. (Reporting by Sahar Ahmed; Editing by Robert Birsel) (For more Reuters coverage of Pakistan, see: here)