Foreign investors: Q1 profit repatriation up 267pc to $213m YoY

KARACHI: Repatriation of profit and dividends by foreign investors posted a healthy growth of 267 percent during the first quarter of this fiscal year (FY24) as restrictions on outflow of foreign exchange eased.

The State Bank of Pakistan (SBP) on Wednesday reported that foreign investors repatriated $213 million on account of profit and dividend in July-September of FY24 as against $58.1 million in the same period of the previous fiscal year (FY22), depicting an increase of $155 million.

Analysts said that the recent increase in the profit and dividend outflows is attributed to some relaxation on capital controls that were implemented due to lack of dollars in the country.

These restrictions were imposed during the last one year to manage the foreign exchange, however, following the IMF’s guidelines, the government has eased these restrictions to facilitate trade and industry.

Repatriation of profits and dividends also witnessed a 17-month high during September 2023. The repatriation of profits and dividends by the foreign investors surged by 448 percent YoY to $ 164 million in Sep 2023 versus $29.9 million in September 2022. Out of total outflow in September 2023, an amount of $ 151 million was repatriated as return on Foreign Direct Investment (FDI) and $ 13 million as return on Foreign Portfolio Investment (FPI).

The detailed analysis of quarterly data revealed that repatriation of profit and dividend from FDI and FPI rose by 288 percent and 125 percent, respectively.

Repartition of profit and dividend from FDI increased to $ 195 million in the first quarter of this fiscal year compared to $ 50.2 million in the same period of last fiscal year (FY23), showing an increase of $145 million.

Similarly, an amount of $ 18 million was sent abroad as return on FPI during July-Sep of FY23 up from $ 8 million in corresponding period of FY22.

Sector-wise data revealed that the highest outflow of profit and dividends amounting to $53.7 million was made from the Petroleum Refining sector. Financial sector stood second with $37 million repatriation in the first quarter of this fiscal year. With $21.8 million, the outflow transportation sector ranked third.

Analysts said that repatriation of profit and dividend is likely to post more growth in coming months.

Copyright Business Recorder, 2023