Karachi: In another blow to the rising current account deficit of the country, the Foreign Direct Investment (FDI) in Pakistan declined sharply by 61% on a year-on-year basis in October.
The State Bank of Pakistan’s provisional report on the statistics of the FDI stated that during October of the current fiscal year, Pakistan attracted a total of $94.9 million in FDI. Compared to the $247.3 million FDI that was recorded during the same month last year, the FDI dropped by nearly 61%.
The report mentioned that the total value of inflows and outflows in direct investment amounted to $119.2 million and $24.3 million, respectively.
Similarly, the FDI in the first four months of FY23 (July – October) dropped to $348.3 million from $726.5 million recorded during the same period in FY22. The difference in FDI during the four months of the two successive fiscal years clocked in at $378.2 million or 52%.
Countrywise, Pakistan received the most amount of FDI from China in October alone, which amounted to $17.6 million, with the Netherlands and Switzerland taking second and third place with $14.8 and $11.7 million in FDI, respectively.
Current Account Deficit widens to 36% in October MoM
Meanwhile, the Current Account Deficit (CAD) of Pakistan widened to 36% in October on a month-on-month basis, the State Bank of Pakistan reported on Monday.
Compared to $363 million recorded in September, the CAD of Pakistan reached $567 million in October. On an MoM basis, that is a 36% jump in deficit. However, on a year-on-year basis, the current account deficit declined sharply by 68% because CAD had hit $1.78 billion in October last year.
It is pertinent to mention here that CAD dropped massively during the first four months of the current fiscal year. During the first four months of FY23 (July-October), the deficit clocked in at $2.82 billion, dropping 46.8% or $2.48 billion from the same period last year when CAD had reached an alarming $5.3 billion.
The State Bank of Pakistan attributed the significant shrinkage in CAD to the declining trend in imports.
“Continuous decline in imports helped improve the Current Account Deficit (CAD) during the first four months of FY23,” the SBP stated.
It further said that during the first four months of FY23, imports reduced by $2.7 billion or 11.6%, while exports increased by $0.2 billion or 2.6% compared to the same period last year.
It is also important to note that Pakistan’s CAD had crossed $17 billion during FY22, after a staggering 531% increase in the balance of payments compared to the current account deficit of $2.8 billion recorded during FY21.