No matter how the government tries to explain the 38.7 percent year-on-year decline in Foreign Direct Investment (FDI) in July, the biggest reason for this slide, which has been pretty noticeable since the last fiscal, is that we continue to rely on China to be our biggest foreign investor. And since Chinese investments have slowed down with the completion of the first phase of the China Pakistan Economic Corridor (CPEC) projects, so has our net foreign exchange inflow. What is more, CPEC’s second phase will see different kinds of investments from the Middle Kingdom, more company-to-company type than government-to-government, so tweets from some senior ministers trying to downplay this dip as a temporary lull aren’t immediately understandable. Plus, China’s own growth is slowing owing to what is now being called the fourth wave of the coronavirus, dragging down all of the Asia Pacific region with it, so there’s not telling yet if it would be in the mood to sprinkle free foreign exchange on our infrastructure for an indefinite period just to make our reserves look good. There are also other very important things to consider. Nothing spooks foreign investment like uncertainty, especially the kind that stems from insecurity, and with the Afghan situation spreading a wave of fear right across the world, it is understandable why investors would not want to touch Pakistan right now; at least not till there is a lot more clarity. Needless to say, of course, that all this has come at a very awkward time for Pakistan; just when it had gone ahead with a very ambitious, expansionary budget that is counting on the country’s improved economic outlook to lure more and more foreign investment into it. It doesn’t help that the same day’s headlines also speak of exporters lamenting soaring input costs. When you are aiming to snap the economy out of low growth by forcing GDP to expand, then you can’t have export earnings and foreign investment suffering. It’s as simple as that. So the government will have to do whatever is needed to calm investors, reach out diplomatically and politically to other countries, and get governments to cajole their investors into coming to Pakistan. That is about the only doable thing in the amount of time the government has to show results and keep the IMF bailout program from collapsing. The economy needs the kind of foreign exchange in its reserves that does not create debt. And there’s no better option on the table than attracting direct foreign investment. *