The Minister in charge of the Prime Minister’s Office has confirmed a sharp decline in foreign investment inflows during the current financial year 2025–26, according to a written reply submitted to the National Assembly.
The response stated that foreign investment inflows fell by 22.0%, dropping from $3,088.7 million to $2,409.2 million. The decline was mainly attributed to ongoing regional and global geopolitical tensions. The Minister pointed to factors such as the Russia-Ukraine conflict, the Gaza tragedy, and continued tensions between India and Pakistan, as well as Pakistan and Afghanistan.
Despite the recent decline, the Minister highlighted that the government had achieved a strong economic recovery in earlier years. Foreign investment inflows reached $3,166.3 million in the financial year 2023–24 and increased further to $4,280.3 million in 2024–25. This represented a growth of 35.2% compared to previous periods.
According to the Minister, this improvement was driven by government-led economic reforms. These included efforts to reduce inflation and interest rates, along with measures aimed at increasing IT exports.
The Minister also acknowledged that the country continues to face key challenges, including debt sustainability issues and structural bottlenecks that affect investor confidence. However, efforts to stabilize the macroeconomic environment helped restore some level of investor trust, contributing to higher investment levels in previous years.
To address the current shortfall in foreign direct investment (FDI), the government is now relying on the recent auction of 5G spectrum to mobile companies. The Minister said the auction is expected to generate significant revenue, which will help offset the decline in foreign investment during the ongoing financial year.
He added that this step, along with other economic measures, is intended to reduce the impact of falling foreign investment on the national economy.