Violence blows a big hole in Jul-Aug FDI

 KARACHI: Long-term investors were further put off Pakistan's deeply troubled economy when the start of the country's new financial year was marred by a Taliban insurgency in the country's northwest and chronic power shortages, analysts say.

Foreign investment in the country fell 76.9 percent in the first two months of the 2011/12 fiscal year (July-June) to $65.2 million due to a decrease in both direct and portfolio investment, the central bank said on Friday.

Investment totalled $282.5 million in the first two months of 2010/11 fiscal year.
FDI fell 39.9 percent in July-August 2011 to $112.4 million from $186.9 million in the same period last year, the State Bank of Pakistan said.

At least 400 people were killed in July and August in violence in the country's main commercial hub and investors have started shunning the country's main stock exchange.

Foreign portfolio investment fell 149.3 percent with outflows of $47.1 million in the first two months of the fiscal year 2011/12, compared with inflows of $95.6 million in the same period last year.

Country’s battered economy needed an International Monetary Fund (IMF) emergency loan package, agreed in November 2008, to help it avert a balance of payments crisis and shore up reserves.

It received the fifth tranche of $1.13 billion of the $11 billion loan in May 2010. (Reuters)