Foreign investment in Pakistan down 47.5 pct

KARACHI, June 17 - Net foreign investment in Pakistan fell 47.5 percent to $2.22 billion in the first 11 months of the 2008/09 fiscal year compared with $4.23 billion in the same period last year, the central bank said on Wednesday.

Foreign private investment fell 34.2 percent to $2.76 billion in the July to May period, compared with $4.20 billion in the corresponding period last year, the State Bank of Pakistan said on its website .

Out of total foreign investment, foreign direct investment was down 19.8 percent to $3.32 billion, compared with $4.15 billion the previous year.

Rated deep in junk bond territory, Pakistan was saved from a balance of payments crisis and default by a $7.6 billion emergency loan package from the International Monetary Fund last November.

Its economy is also in virtual recession with gross domestic product growth for the 2008/09 fiscal year expected at 2 percent, compared with 4.1 percent last year.

There are also security concerns for investors as Pakistan battles a Taliban insurgency in its northwest.

There was an outflow of $1.1 billion from July to May this year compared with an inflow of $87.2 million in the same period the previous year.

There have been outflows from the stock market because of political uncertainty and economic and security worries.

Foreign investors also lost confidence and sold shares when stock market authorities placed a floor under the main index in August following sharp falls.

The floor was removed in December.