Foreign Investors Tell IMF Pakistan's FDI Fell 32 Percent Despite Stabilisation

The Overseas Investors Chamber of Commerce and Industry (OICCI), which represents multinational companies operating in Pakistan, told a visiting International Monetary Fund delegation in Karachi this week that net foreign direct investment fell 32 percent to $1.7 billion in the last fiscal year. The figure was presented directly to IMF staff meeting OICCI leadership and multinational representatives, timed to land in the middle of the same week the Fund's mission opened technical talks for the fourth EFF review.

The gap between stabilisation and investment

OICCI's core argument to the delegation was that Pakistan's macroeconomic stabilisation of the last two years has not, on its own, been enough to bring investors back. That stabilisation is real by most conventional measures: liquid foreign exchange reserves reached $26.8 billion in September, the highest combined level since September 2021, lifting import cover above three months for the first time since August 2020. All three major credit rating agencies upgraded Pakistan's sovereign rating in 2026 — Fitch to B- in April, S&P to B in July, and Moody's to B3 in August. Yet none of that has reversed the FDI slide, which OICCI's own figures put at a third lower than the year before.

What investors say is actually holding them back

Rather than pointing to headline economic instability, OICCI's presentation to the delegation focused on structural friction: regulatory and compliance burdens that multinational firms say remain heavy relative to peer markets, weak investor protection, and inconsistent coordination between federal ministries and provincial authorities on matters that affect the same investment decision. The chamber pressed the delegation on energy security and export competitiveness as well, arguing that reforms need to extend beyond the fiscal and monetary levers the IMF programme already targets.

Inflation still eating into the stabilisation story

Part of what complicates OICCI's stabilisation-without-investment narrative is that price stability itself remains incomplete. Headline inflation stood at 11.15 percent in August, still well above the State Bank of Pakistan's 5-7 percent target band, even as the central bank has held its policy rate at 11.5 percent for three consecutive meetings. Investors weighing a multi-year capital commitment are reading a mixed signal: reserves and ratings pointing one way, an inflation rate more than 4 percentage points above target pointing the other.

A pattern that predates this review

This is not the first time a chamber of foreign investors has used an IMF mission's presence as the moment to escalate the same complaints. What is notable is the scale of the number itself — a 32 percent year-on-year fall is a sharper decline than the general "stabilisation hasn't reached the real economy" framing usually implies, and it lands just as Pakistan's benchmark stock index has been on a sustained rally, underscoring a split between portfolio capital moving into Pakistani equities and the longer-horizon capital that FDI represents.

Why this matters for the review under way

The IMF's own review process is largely mechanical — it checks quantitative performance criteria and structural benchmarks against a programme document. OICCI's intervention doesn't change those metrics directly, but it does inform how IMF staff and, ultimately, the Fund's board characterise Pakistan's progress in the review's qualitative narrative. A chamber representing the multinational firms IMF programmes are partly designed to reassure telling the Fund that stabilisation hasn't moved the needle on actual capital commitments is the kind of testimony that shapes how "successful" a review is judged to be, independent of whether every quantitative target is met. It also lands alongside continuing scrutiny of Pakistan's reserve build-up, which we've covered separately, where the composition and durability of reserve gains matters as much as the headline number.

Build Better Pakistan's Economy Desk is tracking OICCI's engagement with the IMF review and will follow up as the Fund's mission concludes its Karachi and Islamabad talks.