Karachi, January 27, 2024 – In a startling revelation, official data released by the State Bank of Pakistan (SBP) on Friday disclosed a staggering 161 percent surge in foreign profit and dividend repatriation from Pakistan in the first half of the fiscal year 2023-24.
The data unveils a sum of $567.70 million repatriated by foreign investors during July to December 2023, a substantial increase from the $217.60 million recorded in the same period of the preceding fiscal year.
The repatriation of profit and dividend against Foreign Direct Investment (FDI) demonstrated an even more substantial rise, witnessing an increase of 185 percent. Foreign investors repatriated $521.40 million during the first half of the current fiscal year, in stark contrast to the $182.80 million reported in the corresponding half of the previous fiscal year. Additionally, repatriation against foreign portfolio investment exhibited a notable 33 percent increase, reaching $46.30 million from $34.80 million in the same period of the last fiscal year.
Analysts are pointing towards the looming uncertainty ahead of the general elections in Pakistan, scheduled for February 8, 2024, as the primary catalyst behind the unprecedented surge in profit repatriation. The apprehension surrounding the political landscape and potential policy shifts has seemingly prompted foreign investors to withdraw a substantial amount of their investments.
Furthermore, the liberalization of policies by the State Bank of Pakistan, allowing foreign investors to freely repatriate their profits and dividends, has been identified as an additional driving force behind the significant outflows. The policy shift, aimed at attracting foreign capital, appears to have enabled investors to capitalize on the opportunity to take their gains out of the country.
While the surge in repatriation could be viewed as a sign of apprehension among foreign investors, some experts argue that it may also indicate their confidence in the ability to secure returns and navigate potential challenges associated with the changing political landscape.
The upcoming general elections have heightened economic uncertainties, and foreign investors may be adopting a cautious approach by withdrawing their profits ahead of any potential policy adjustments that may be introduced by the new government. The correlation between political events and economic activities has often been a subject of scrutiny, and the current situation in Pakistan appears to be no exception.
Government officials are expected to closely monitor the situation, as the surge in profit repatriation could impact the country’s foreign exchange reserves and economic stability. The need for a balanced approach to ensure a favorable investment climate, along with political stability, will be crucial for the new government post-elections.
As the political climate in Pakistan continues to evolve, market participants, policymakers, and investors will keenly observe the unfolding dynamics, with the hope that the post-election period brings clarity and a conducive environment for sustained economic growth.
