Multinational Investor Group Reports 32% FDI Decline to Pakistan During IMF Review

KARACHI — A chamber representing multinational companies told visiting IMF delegates this week that economic stabilization has yet to revive investment, with net foreign direct investment falling 32% to $1.7 billion in fiscal year 2026.

The mission is conducting the latest review of Pakistan’s economic bailout and climate-resilience financing program alongside a standard Article IV consultation assessing the economy, financial risks, and government policies.

Pakistan operates under a 37-month, $7 billion Extended Fund Facility approved in September 2024 and a separate $1.4 billion Resilience and Sustainability Facility. The IMF reported in May that total disbursements under both programs had reached roughly $4.8 billion, with further payments contingent on successful reviews.

On Thursday, delegation members met OICCI leadership and multinational representatives in Karachi to discuss investment, exports, energy security, and structural reforms.

The chamber noted that despite improvements in Pakistan’s external position and sovereign credit profile, net FDI declined roughly 32% to $1.7 billion in FY26.

It urged reduced regulatory complexity, stronger investor safeguards, and better coordination between federal and provincial governments.

Pakistan’s fiscal year 2026 ended on June 30.

The economy has stabilized since a balance-of-payments crisis brought it close to default in 2023. Foreign-exchange reserves have increased, inflation has eased from earlier peaks, and credit-rating agencies have upgraded Pakistan’s sovereign standing.

However, the OICCI said greater regulatory certainty and stronger investor protections were needed to translate those gains into private investment. It also urged Pakistani businesses to reinvest domestically, noting that foreign companies follow the lead of local investor confidence.

The chamber emphasized that faster growth remains impossible without increasing exports and other foreign-exchange sources needed to cover imports and service external debt.

Pakistan cannot achieve higher growth without expanding its capacity to earn foreign exchange.

OICCI called for more competitive export industries, deeper trade and investment relations with major markets, and greater regional commerce where commercially viable.

It also urged immediate energy-conservation measures and a medium-term plan to reduce dependence on imported fuel as geopolitical tensions and regional shipping disruptions drive up global oil prices. Pakistan imports much of its petroleum, leaving its economy particularly exposed to international energy costs.

The chamber called for a single energy-security strategy covering electricity, natural gas, and petroleum, including investment in oil refining and opportunities for regional energy cooperation.

Other recommendations included accelerating reform and privatization of loss-making state-owned companies and extending taxation to under-taxed sectors such as agriculture, property, retail, and small and medium-sized businesses rather than repeatedly increasing burdens on companies already operating in the formal economy.

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