Pakistan’s fiscal year runs from July to June, thus data used by most of the commentaries are for the same period, but in order to lens it with a different eye and for the sake of brevity, Geo Business Desk analyzed the numbers from January to November and here is what they have found.
Pakistan received $1.57 billion in foreign investments (FI) from January to November. The tally is 24 percent lower compared to same period 2015. According to State Bank of Pakistan data out of this total $894 million received in Net Foreign Private Investments and the remaining $677 million received by public sector. Foreign investments are falling since 2008. Mian Zahid Hussain has said this trend is due to higher cost of doing business, he added that besides taxation policy and traded related disputes are other factors for falling investments
China remains the top investor with $333 million dollars, US invested $222 million where as Norway invested $150 million from January to November. Turkey, UAE and Italy were other major investor. Saudi Arab lead the list of investment outflow, United Kingdom and Luxembourg follow the course. Power sector tops the list in receiving $331 million during this time.
Pakistan Stock Exchange despite it exceptional run witnessed $327 million outflow. Muzzamil Aslam of IFSL said this trend was surprising and due to redemption in the world market. He added that local investors were absorbing all foreign selling, which was a healthy sign amid in the past foreign selling used to bring the main index down.
Thus the outgoing year was not very promising for foreign investments but CPEC and PSX MSCI-EM entry would change the trend. Asad Rizvi a financial markets expert said that Pakistan needs investment in new projects because on the privatization front Pakistan has nothing left to sell.
But CEPC alone would not give results, as for long term investments, investors seek long term prudent policies, expert says if the government fine tunes this area, foreign investment would flow even faster.
In 2016, Pakistani Rupee performed well in interbank market. At the start of New Year the dollar valued Rs 104.70 in interbank market and the trading range for the year remained in a band of Rs 104.10 and Rs 105. Economic experts said that in 2016 Pakistan successfully completed IMF extended fund facility program. Besides, cheaper oil internationally reduced Pakistan import bill, both these factors kept rupee stable in interbank foreign exchange market.
Many believe that the government kept the rupee artificially strong amid a one rupee fall in dollar increased Pakistan’s debt by Rs.70 billion and a weaker rupee also made imported products dearer.
But the outlook in open market for rupee was weak and anemic. Dollar/rupee parity moved in a band of Rs 105 and Rs 108.70 during the year. According to experts the main reason behind rupee falling was gold smuggling. Economic experts believes that the government would have to improve its policies so general public can reap its benefits.