Foreign investors: Repatriation of profits, dividends hits 6-year high

KARACHI: The repatriation of profits and dividends by foreign investors, during last fiscal year, rose to its highest level in six years as the State Bank of Pakistan (SBP) allowed to clear all the backlogs of unpaid dividends and profits.

The SBP on Monday reported that repatriation of profits and dividends recorded a 565 percent increase in the last fiscal year. Foreign investors repatriated $2.2 billion on account of profit and dividend in FY24 compared to $331 million in FY23, depicting an increase of $1.86 billion. Analysts said Pakistan witnessed the highest-ever profit and dividend repatriation since FY18 as the State Bank granted permission for the clearance of the backlog. The SBP allowed massive repatriation on an improved current account.

The last month of FY24, ie, June alone recorded a 23-fold increase in the repatriation of profit and dividend. An amount of $414 million was repatriated in June 2024. This includes $390 million from foreign direct investment and $24 million from portfolio investment.

Governor SBP Jameel Ahmed, in the Monetary Policy’s press conference on Monday at SBP head office also said that presently there are no restrictions on external payments and banks were allowed to repatriate all pending amounts on account of profit and dividend. He mentioned that June current account deficits were largely due to higher dividend and profit payments.

According to SBP, repatriation of profit and dividend on account of Foreign Direct Investment (FDI) posted an increase of 679 percent. Foreign investors repatriated an amount of $2.085 billion as return on FDI in FY24 compared to $267.5 million in FY23. In addition, during FY24 an amount of $130 million was repatriated from Pakistan on account of foreign portfolio investment up from $63.5 million in FY23.

Key sectors contributing to this outflow include financial Business, which amounted to $638.6 million in the last fiscal year compared to $36 million in the previous year. Power sector ranked second with $245.8 million outflow on account of profit and dividend, up from $44 million last year. Investors from petroleum refining repatriated $131 million, communications amounted to $205.4 million, transport $174 million and Chemicals sector $76.2 million during the last fiscal year.

Copyright Business Recorder, 2024