KARACHI: Pakistan’s foreign direct investment (FDI) witnessed a slump of 45% in the month of February, the central bank data showed, with the Overseas Investors Chambers of Commerce & Industry (OICCI) pointing to the reluctance of investors to park their money in a country where “policies remain mostly inconsistent and businesses over-regulated.”
Pakistan’s government is working hard to convince foreign countries, including China, Saudi Arabia and United Arab Emirates as well as multinational firms, to invest in its mineral, agriculture, information technology and other sectors under the banner of the Special Investment Facilitation Council (SIFC), a civil-military forum.
The South Asian country of more than 240 million people, however, could only attract $95 million FDI in February compared with $172 million in the same month last year, according to the State Bank of Pakistan (SBP) data. Pakistan’s total FDI inflows in the first eight months of this fiscal year (Jun. 2024-Feb. 2025) stood at $1.62 billion.
“We lack consistency in our policies. Though political uncertainty is also important, policies that keep facing sudden changes, matter more,” said M. Abdul Aleem, chief executive officer of the Overseas Investors Chambers of Commerce & Industry (OICCI), told Arab News.
The OICCI is the oldest chambers of South Asia which represents more than 200 multinational companies operating in Pakistan. Some of its prominent members include Citibank N.A., Coca-Cola Beverages Pakistan Ltd., Akzo Nobel Pakistan Ltd., Toyota’s Pakistan unit Indus Motor Company Ltd., Mitsubishi Motors Corporation and Maersk Pakistan (Pvt.) Ltd.
In the past decade, Aleem said, his chamber had reinvested more than $22 billion in Pakistan, compared with $19.8 billion the country attracted on account of FDI from new projects, including the China-Pakistan Economic Corridor (CPEC).
“About 100 billion rupees of tax refunds of our member companies are stuck (with the government),” said the OICCI official, who has an extensive portfolio of leadership positions in Exxon Chemicals, Engro Corporation and the British American Tobacco Group UK.
Pakistan saw the departure of some large multinational companies in recent years.
TotalEnergies sold its 50% shareholding in Total PARCO Pakistan Limited to commodities giant Gunvor Group last year in August, while Shell Petroleum Company Limited signed an agreement with Wafi Energy LLC of Saudi Arabia to sell its majority stake in the Pakistan business in Nov. 2023.
“You saw some oil companies leaving Pakistan recently. Shell left, Total Parco left. They left because of all these factors that kept building up for years,” Aleem said.
“Many pharmaceutical companies shrank their businesses in Pakistan after the government started controlling the prices of medicines,” he said, without naming the firms.
Aleem cited Pakistan’s recently introduced refinery policy as an example that was “hurting” investor sentiment as a sudden change in the relevant tax laws made the deal “unviable” for companies.
“The foreign investors look at all these things and get upset. Good or bad you make a policy at once and do not change it,” he explained.
Pakistan faces a balance of payment crisis time and again and should therefore incentivize exports-oriented businesses that could invest their money in the country and export what they produce, according to the OICCI official.
“IT was one such area where the potential was very high. But then you see what sort of problems the Internet speed is facing,” he said.
Pakistan, a country of over 240 million, has witnessed up to 40% drop in Internet speeds in the last few months, according to the Wireless and Internet Service Providers Association of Pakistan (WISPAP). The drop came as the government last year moved to implement a nationwide firewall to block malicious content and protect government networks from cyberattacks, with IT associations saying the slowdowns have resulted in significant losses.
The OICCI secretary general said the government should activate the Board of Investment (BoI) to facilitate foreign investors through a one-window operation.
“The SIFC must be doing a good job but it is the Board of Investment’s job. If a foreign investor would deal with the army what impression would he get,” he said.
Pakistan constituted the SIFC, a civil-military body, in June 2023 to attract international investment in agriculture, energy, livestock, tourism, mining and minerals, and other priority sectors, amid an economic meltdown. The South Asian country averted a default that year, thanks to a $3 billion International Monetary Fund (IMF) program, and is currently navigating a path to economic recovery under another $7 billion IMF bailout.
Last week, Pakistan’s finance adviser Khurram Schehzad said the government was actively working to attract efficient, export-driven FDI to strengthen Pakistan’s economic foundation. But the country’s volatile security situation and the cash-strapped government’s revision of mid-stream unilateral contracts are further deteriorating the situation.
Kaiser Bengali, a Karachi-based development economist, said the SIFC was an ad hoc body which was working without having any “constitutional basis.”
“It is here today, gone tomorrow. Investors need certainty,” he said.
Bengali said Pakistan’s macroeconomic framework over the last four decades was geared to promote wealth generation via speculation in the stock market, real estate and under-invoicing of imports, rather than investment in productive sectors like manufacturing.
“Thus, foreign funds flow as short-term portfolio investment,” he said. “Thus, there is little incentive for serious FDI.”
Pakistan foreign direct investment declined 45% in Feb year on year, data shows
https://arab.news/vqfyd
Pakistan foreign direct investment declined 45% in Feb year on year, data shows

- Pakistan received $95 million FDI inflows last month, compared to $172 million in Feb. 2024
- Overseas chamber says multinational companies leaving Pakistan due to ‘inconsistent policies’
Pakistan’s UN envoy says India’s suspension of water treaty illegal, poses ‘existential threat’

- Ambassador Ahmad warns India’s action could set a dangerous precedent undermining rights of lower riparian states
- He says Pakistan rejects any attempt to associate it to the April 22 attack, which it condemned alongside other nations
ISLAMABAD: Pakistan’s top diplomat at the United Nations on Friday raised alarm over India’s decision to suspend a decades-old river water sharing mechanism between the two nations after a gun attack killed 26 people in the disputed Kashmir region on April 22.
New Delhi blamed Islamabad for the assault in Pahalgam, a tourist hotspot in Indian-administered Kashmir, despite Pakistani denial of involvement and calls for an independent investigation. India also expelled Pakistani diplomats, shut a major border crossing and suspended the 1960 Indus Waters Treaty (IWT) in the wake of the attack.
Ambassador Asim Iftikhar Ahmad, Pakistan’s Permanent Representative to the UN, told a media briefing at the UN his country “categorically rejects any attempt to associate it with the 22 April terrorist incident” and had condemned it alongside other Security Council members.
He described India’s conduct as “incendiary,” saying it disregarded international law and could have “far-reaching consequences for global peace and stability.”
“Of grave and particular concern is India’s irresponsible decision to hold in abeyance the historic Indus Waters Treaty of 1960, a landmark, legally binding agreement brokered and guaranteed by the World Bank,” he said.
“Holding of IWT in abeyance is unilateral and illegal,” he continued. “There are no such provisions in the Treaty. India’s unilateral and unlawful actions are bound to undermine regional peace and stability with catastrophic implications.”
The Pakistani envoy warned that the suspension of the IWT posed “an existential threat to the people of Pakistan” and amounted to the usurpation of the rights of lower riparian states.
“If left unchecked by the international community, such actions risk setting a dangerous precedent that could undermine the legal rights for lower riparian states, potentially triggering new global conflicts over shared water resources,” he said.
Ahmad also expressed concern over escalating rights violations in Indian-administered Kashmir, the only Muslim-majority region under New Delhi’s control, since the Pahalgam attack.
He cited reports of arbitrary detentions, home demolitions and “collective punishment” imposed on civilians by the Indian authorities.
He reiterated Pakistan’s longstanding position that the root cause of instability in South Asia was the unresolved Jammu and Kashmir dispute, and warned of the risk of wider conflict in the nuclear-armed region.
“Escalation in South Asia, home to nearly two billion people, favors none,” Ahmad said. “It is time for sanity to prevail and allow dialogue and diplomacy to prevent the situation from spiraling out of control.”
Pakistan sees tax-to-GDP ratio hitting 10.6% by June as reform efforts continue

- The country’s tax-to-GDP ratio was among the lowest in the region and stood at 8.8% in FY2023-24
- Pakistan’s finance chief projects foreign exchange reserves to reach $14 billion by the end of June
KARACHI: Pakistan’s finance chief said on Friday the country’s tax-to-GDP ratio was expected to reach 10.6% by the end of the current fiscal year, according to an official statement, as the government works to build on economic progress made under recent International Monetary Fund (IMF) loan programs.
Pakistan’s tax-to-GDP ratio, one of the lowest in the region, stood at around 8.8% in fiscal year 2023-24. Finance Minister Muhammad Aurangzeb has repeatedly warned that such low levels of revenue mobilization are unsustainable and pose long-term risks to fiscal stability.
Aurangzeb shared the projection while briefing representatives of Standard & Poor’s Global Ratings as part of Pakistan’s ongoing sovereign ratings review.
“The Finance Minister presented a detailed overview of the government’s macroeconomic reform agenda and reaffirmed Pakistan’s commitment to achieving sustainable and inclusive economic growth by enhancing productivity and promoting exports,” the finance ministry said in a statement after the meeting.
He said Pakistan’s external portfolio was well-managed, with foreign exchange reserves projected to reach $14 billion by the end of June.
“He further stated that the tax-to-GDP ratio was expected to reach 10.6 percent by the end of June, which would mark progress toward the government’s target of raising it to 13 percent by the conclusion of the 37-month Extended Fund Facility (EFF) with the International Monetary Fund (IMF),” the statement said.
Pakistan has taken several steps to improve revenue collection, including the automation of processes at the Federal Board of Revenue (FBR), the operationalization of the National Tax Council and the imposition of agricultural income tax.
It has also separated the Tax Policy Office from the FBR to better align tax policymaking with broader economic goals.
Aurangzeb also highlighted recent surpluses in both the primary balance and the current account, along with falling inflation and current account deficit figures, which he said were contributing to improved economic fundamentals.
During last month’s IMF-World Bank Spring Meetings in Washington, the Pakistani finance chief held over 70 engagements with rating agencies, development finance institutions, investors and think tanks.
The government also maintains the international community broadly supports Pakistan’s reform agenda, as it tries to maintain its overall economic momentum.
India asks IMF to review loans to Pakistan, Indian government source says

- The adviser to Pakistan’s finance minister says the IMF program is ‘well on track’
- The soaring tensions between the two states has drawn calls for cooling tempers
NEW DELHI/KARACHI: India has asked the International Monetary Fund to review loans disbursed to Pakistan, an Indian government source told Reuters on Friday, as tensions between the South Asian neighbors escalated following a deadly attack in Kashmir.
India and Pakistan have announced a raft of measures after an attack on Hindu tourists in Indian-administered Kashmir last week killed 26 men and there is a fear that the latest crisis between the nuclear-armed rivals could spiral into a military conflict.
New Delhi has identified the three attackers, including two it says are Pakistani nationals, as “terrorists.” Islamabad has denied any role and called for a neutral investigation.
India suspended a critical river water sharing treaty and the two countries have closed their airspace to each other’s airlines.
Pakistan secured a $7 billion bailout program from the IMF last year and was granted a new $1.3 billion climate resilience loan in March.
The program is critical to the $350 billion economy and Pakistan said it has stabilized under the bailout that helped it stave off a default threat.
India raised concerns with the IMF on its loans to Pakistan, asking for a review, a government source told Reuters without elaborating.
The IMF and India’s finance ministry did not immediately respond to a request for comment.
The adviser to Pakistan’s finance minister said the IMF program is “well on track.”
“The latest review has been done well and we are completely on track,” adviser Khurram Schehzad told Reuters, adding that Pakistan had very productive spring meetings with financial institutions in Washington.
“We did about 70 meetings ... interest has been very high for investing and supporting Pakistan as the economy turns around,” Schehzad said.
The soaring tensions between the two countries has drawn global attention and calls for cooling tempers.
Muslim-majority Kashmir is claimed in full by both Hindu-majority India and Islamic Pakistan, but each rules it in parts.
While New Delhi accuses Pakistan of backing an uprising in Indian Kashmir since 1989, Pakistan says it only offers diplomatic and moral support to a Kashmiri demand for self-determination.
Pakistani generals link Kashmir attack to India’s ‘governance failures,’ vow to defend sovereignty

- Army says India uses such incidents for political gains like suspending Indus Waters Treaty
- The generals says the Pahalgam attack was to help ‘Indian terror proxies’ targeting Pakistan
KARACHI: Pakistan’s top generals on Friday blamed last month’s tourist shootings in Indian-administered Kashmir on New Delhi’s “governance failures” and its strategy of using such incidents for political gain, while warning Pakistani security forces were ready to respond to any attack on the country’s sovereignty, according to an official statement.
India blamed Pakistan for the April 22 attack in the scenic town of Pahalgam, in Kashmir’s Anantnag district, where gunmen killed 26 people in one of the deadliest assaults on civilians in nearly two decades.
Pakistan denied involvement, though tensions escalated as India expelled Pakistani diplomats and nationals, closed a key border crossing and suspended the decades-old Indus Waters Treaty (IWT), which has governed the distribution of river waters between the two countries since 1960.
Pakistan’s top general gathered at the General Headquarters (GHQ) in Rawalpindi earlier today to review the geo-strategic environment, with particular focus on the Pakistan-India standoff and the broader regional security situation, the military’s media wing, Inter-Services Public Relations (ISPR), said.
“The Forum noted, with serious concern, India’s consistent pattern of exploitation of crises to achieve political and military objectives,” the ISPR said. “They have been following a predictable template — whereby internal governance failures are externalized.”
“These incidents have often coincided with unilateral moves by India to alter the status quo, as seen in 2019 when India similarly exploited the Pulwama incident to unilaterally alter the status quo of Indian Illegally Occupied Jammu & Kashmir, through revocation of Article 370,” it added.
The 2019 Pulwama attack killed 40 Indian paramilitary personnel and was also blamed on Pakistan before New Delhi revoked the region’s special constitutional status to integrate it in the Indian union, a move repeatedly condemned by Islamabad.
The generals expressed concern that India was now using the Pahalgam shootings to undermine the IWT and “usurp Pakistan’s legitimate and inalienable water rights.”
The statement called the move a dangerous attempt to “weaponize water,” threatening the livelihoods of more than 240 million Pakistanis and increasing strategic instability in South Asia.
The commanders also voiced alarm over what they described as credible evidence of Indian military and intelligence involvement in orchestrating militant violence inside Pakistan.
They accused New Delhi of using the Kashmir attack to divert attention from its own domestic challenges and to provide “operational breathing space” to what they called “Indian terror proxies” targeting Pakistan.
While reaffirming Pakistan’s commitment to regional peace and stability, the generals warned that any attempt to impose conflict would be met with a “sure and decisive” response.
Chief of Army Staff General Asim Munir praised the operational readiness and morale of Pakistan’s armed forces and emphasized the need for vigilance and proactive readiness across all fronts.
“Deliberate destabilization efforts by the Indian government will be confronted and defeated with resolve and clarity,” the ISPR said.
US vice president hopes Kashmir attack won’t spark wider conflict

- JD Vance says Pakistan should deal with militants that ‘sometimes operate’ in its territory
- US has expressed support for India after the April 22 attack without directly blaming Pakistan
WASHINGTON: US Vice President JD Vance said on Thursday Washington hoped Pakistan would cooperate with India to hunt down Pakistan-based militants, and that India’s response to the recent Islamist militant attack in India-administered Kashmir does not lead to a broader regional conflict.
“Our hope here is that India responds to this terrorist attack in a way that doesn’t lead to a broader regional conflict,” Vance said in an interview on Fox News’ “Special Report with Bret Baier” show.
“And we hope, frankly, that Pakistan, to the extent that they’re responsible, cooperates with India to make sure that the terrorists sometimes operating in their territory are hunted down and dealt with,” Vance added.
Vance’s comments are the closest the US government has come since the April 22 attack — in which 26 people were killed — to potentially linking Pakistan to extremism in India.
Top US leaders, including President Donald Trump, have condemned the attack, calling it “terror” and “unconscionable,” while expressing support for India without directly blaming Pakistan.
India is an important US partner as Washington aims to counter China’s rising influence. Pakistan remains Washington’s ally even as its importance diminished after the 2021 US withdrawal from neighboring Afghanistan.
In recent days, Washington urged India and Pakistan to work with each other to de-escalate tensions and arrive at a “responsible solution.”
India has blamed Pakistan for the attack. Islamabad denies responsibility and is calling for a neutral probe.
The US State Department has said it was in touch with the nuclear-armed Asian neighbors at multiple levels and Secretary of State Marco Rubio held calls on Wednesday with Indian Foreign Minister Subrahmanyam Jaishankar and Pakistani Prime Minister Shehbaz Sharif.
Hindu nationalist Indian Prime Minister Narendra Modi vowed to punish those responsible and Jaishankar has told Rubio that the perpetrators should be brought to justice. Pakistan says military action by India was imminent.
Muslim-majority Kashmir is claimed in full by both Hindu-majority India and Islamic Pakistan, with each controlling only part of it and having fought wars over it.
After the attack, India suspended a treaty regulating water-sharing, and both countries closed airspace to each other’s airlines. They also exchanged fire across their border.