December 16, 2009 / 11:14 AM / 8 years ago

Pakistani foreign investment falls 25.6 pct

KARACHI, Dec 16 (Reuters) - Net foreign investment in Pakistan fell 25.6 percent to $1.08 billion in the first five months of the 2009/10 fiscal year compared with $1.45 billion in the same period a year earlier, the central bank said on Wednesday.

Out of total foreign investment, foreign direct investment fell 52.2 percent to $774.0 million in the first five months of the fiscal year which began on July 1 from $1.62 billion for the same months last year, the State Bank of Pakistan said.

But foreign portfolio investment flows reversed, with a $311.3 million inflow in the July to November period compared with an outflow of $162.9 million in the same period last year.

Authorities imposed a floor on the Karachi Stock Exchange benchmark index in August last year as political uncertainty and economic and security worries drained investor confidence.

The floor discouraged new investment and also led to a sharp outflow of funds, as foreign investors sold holdings in off-market trade.

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 over a Taliban insurgency based in the country's northwest and chronic power shortages have also put off investors. (For full coverage of Pakistan, click on [ID:nAFPAK] (Reporting by Sahar Ahmed; Editing by Robert Birsel) (For more Reuters coverage of Pakistan, see: here)

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