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KARACHI: The repatriation of profits and dividends from foreign investments in Pakistan experienced a remarkable increase of 85 percent during the first quarter of this fiscal year (FY25). According to the State Bank of Pakistan (SBP), foreign investors repatriated an amount of $393.4 million in July-Sep of FY25 as compared to $213 million in same period of last fiscal year (FY24), depicting an increase of $180 million.

Analysts said that with the ongoing improvement in the country’s external accounts, foreign businesses operating in Pakistan have been increasingly repatriating their revenues since the start of FY25.

They said that the higher outflows also reflect that the country’s economy is gradually improving. Last year, the government had temporarily halted profit repatriations for several months to address external liabilities and maintained the foreign exchange reserves. This current outflow of profit and dividend indicates that the government is now allowing foreign companies to transfer their profits abroad without any restriction, they added.

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During the first quarter of this fiscal year, repatriation of profit and dividend on account of return on Foreign Direct Investment (FDI) rose by 90 percent to $370 million up from $195 million in the corresponding period of last fiscal year.

In addition, outflow of profits and dividends from foreign portfolio investments (FPI) was $23 million in July-Sep 2024, as against $18 million in the same period last year.

However, there was a slight decline in monthly repatriation figures in September 2024. Foreign firms transferred $119 million back to their home countries on account of profit and dividend, down from $135.6 million in August 2024. Out of the total amount repatriated in Sep, some $102 million was sent abroad on account of return on FDI, while $16.3 million as return on FPI.

Currently, the SBP’s foreign exchange reserves are increasing on higher foreign inflows and stood at $11.04 billion as of October 18, 2024. The reserves are sufficient to cover over two weeks of imports. This financial stability has enabled the SBP to relax earlier stringent measures, fostering a more conducive environment for foreign investors.

The UK led the repatriation of profits with $145.5 million, followed by the US at $56.1 million and the UAE at $39.3 million in the first quarter of this fiscal year.

The financial sector accounted for the largest outflow, with $88.2 million up from $37 million last year. The tobacco industry followed with $68 million in repatriated earnings, and the transportation sector recorded outflows of $47.4 million in the first three months of the fiscal year.

Copyright Business Recorder, 2024

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