Karachi, September 26, 2024 — The repatriation of profits and dividends by foreign companies operating in Pakistan surged by an astounding 461% during the first two months (July-August) of the current fiscal year 2024-25, according to data released by the State Bank of Pakistan (SBP) on Thursday.
The SBP reported that profit and dividend repatriation reached $275 million during this period, a significant increase from the $49 million recorded in the corresponding months of the previous fiscal year. This dramatic rise highlights the impact of recent policy changes by the central bank aimed at facilitating foreign investors.
Market analysts attribute the surge to the SBP’s more liberal approach towards allowing profit and dividend repatriation by foreign companies. In previous years, the SBP had imposed restrictions due to Pakistan’s foreign exchange crisis, limiting the ability of companies to repatriate earnings. However, as the country’s foreign exchange reserves stabilized and economic conditions improved, the central bank lifted many of these restrictions, creating a more favorable environment for foreign businesses to repatriate their profits.
A breakdown of the data shows that profit repatriation against Foreign Direct Investment (FDI) saw a particularly sharp rise. During the first two months of FY25, repatriation of profits linked to FDI reached $268 million, compared to just $44 million during the same period in FY24. This substantial increase is indicative of improved investor confidence in the country’s economic recovery and the SBP’s measures to support foreign investors.
Additionally, repatriation of profits and dividends against foreign portfolio investment (PFI) also saw a modest increase, rising to $6.6 million during July-August FY25, compared to $5.3 million in the same period last year. Although smaller in scale compared to FDI repatriation, this rise also reflects growing investor interest and activity in Pakistan’s financial markets.
The sharp increase in profit repatriation underscores the importance of stable economic policies for maintaining investor confidence. As Pakistan continues to recover from previous economic challenges, including a foreign exchange crisis, the SBP’s proactive measures to create a more predictable and open environment for foreign investors are playing a crucial role in restoring investor trust.
Looking ahead, continued efforts to enhance the country’s investment climate, paired with a focus on maintaining fiscal discipline, will be critical for sustaining this upward trend in foreign investment and profit repatriation.
