Karachi, March 27, 2024 – The repatriation of profit and dividends by foreign investors operating in Pakistan has witnessed a remarkable surge, soaring by 237 percent during the first eight months (July – February) of the fiscal year 2023-24, according to official data released on Wednesday.
The State Bank of Pakistan (SBP) disclosed that the repatriation of profit and dividends reached $759 million during the initial eight months of the current fiscal year, compared with $225 million in the corresponding period of the previous fiscal year.
Foreign direct investment (FDI) outflows for profit and dividends recorded a staggering increase of 272 percent, amounting to $704 million during July – February 2023-24, compared to $189 million in the same period of the last fiscal year.
Furthermore, profit repatriation against portfolio investment surged by 51 percent, totaling $56 million during the first eight months of the current fiscal year, compared with $37 million in the corresponding period of the previous fiscal year.
Market experts attribute this substantial increase in profit and dividend repatriation to the relaxation in dollar outflow facilitated by the central bank. Previous years saw the imposition of various restrictions on foreign exchange outflows due to currency market uncertainties. However, recent crackdowns against currency smuggling and actions against exchange companies have stabilized currency rates, enabling the central bank to ease conditions.
The petroleum refining sector witnessed the most significant outflow of profit and dividends, with foreign investors repatriating $126 million during the first eight months of the current fiscal year, compared to a mere $0.2 million in the same period of the last fiscal year.
Similarly, the power sector experienced a substantial outflow of $109 million compared to $32.2 million, while the financial business sector recorded repatriation of $104 million compared to $18 million in the corresponding period.
Analysis of repatriation by country reveals that investors from the United Arab Emirates (UAE) repatriated $179 million during July – February 2023-24, compared to $12 million in the previous fiscal year. Investors from the United Kingdom also repatriated a significant amount, totaling $107 million, compared to $26.3 million previously. Chinese businesses repatriated $76 million during the period under review, up from $34.4 million in the same period of the previous fiscal year.
The surge in profit and dividend repatriation underscores foreign investors’ confidence in Pakistan’s economic landscape. However, it also prompts considerations regarding the balance between encouraging foreign investment and ensuring that capital remains within the country to foster local economic growth.
