Foreign investors have repatriated profit amounting $225 million from Pakistan during first eight months of 2022-2023 despite dollar crunch.
Interestingly, the repatriation is higher than the inflow of $188 million foreign direct investment (FDI) into Pakistan in the same period of current fiscal year, according to data released by State Bank of Pakistan (SBP) on Monday.
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Pakistan is currently facing a dollar crunch due to a widespread shortage of foreign exchange reserves, which has led to banks refusing to open letters of credit for even essential imports such as food and energy.
This situation has resulted in multinational companies operating in Pakistan being unable to repatriate their dividends in recent quarters due to the restrictions on dollar outflows.
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The country’s foreign exchange reserves are at a multi-year low, forcing the government to stop large dollar outflows, including those by overseas investors. The pending dollar dividends for several sectors, including banking, food, telecom, chemical, power, tobacco, auto, and energy exploration, amount to more than $1 billion.
In response, a group representing international investors has held a meeting with the State Bank of Pakistan governor to resolve the matter of pending dividends and requested partial remittance of dividends until the situation improves.
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The SBP data revealed that the foreign investors had repatriated profits and dividends amounting to $1.15 billion in the first eight months of the last fiscal year. Meanwhile, the inflows of FDI was recorded at $1.04 billion in the period under review of the last fiscal year.
Pakistan is facing acute shortage of dollars due to higher outflows and difficulties on the external fronts. Banks in Pakistan are currently facing restrictions on opening letters of credit (LCs) due to a widespread shortage of foreign exchange reserves in the country.
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This has led to delays and difficulties in importing essential items such as food and energy. The restrictions on LCs have also affected multinational companies operating in Pakistan, as they have been unable to repatriate their dividends in recent quarters due to the curbs on dollar outflows.
