Profit repatriation declines 88pc to $58.1mn in Q1FY23

KARACHI: Repatriation of profits and dividends on foreign investment in Pakistan fell 88 percent to $58.1 million in the first quarter of this fiscal year, the central bank data showed on Thursday.

The multinational companies sent $477.7 million to their headquarters overseas in the corresponding period of last fiscal year.

In September, the profit and dividends on foreign investment stood at $29.9 million, compared with $11.8 million in the previous month.

Foreign firms repatriated profit of $50.2 million against foreign direct investments in various businesses in July-September FY2023. That compared with $451 million in the corresponding period last year.

Moreover, they made a profit worth $7.9 million against investments in shares at the local bourse. These earnings stood at $26.7 million a year earlier, according to data issued by the State Bank of Pakistan.

A decline in the repatriated earnings of the foreign firms was due to lower outflows from the financial, power, communications and oil and gas exploration sectors in three months of the current fiscal year.

The outflows from the power sector stood at $15.4 million in July-September FY2023. These outflows amounted to $58.8 million in the corresponding period of last year.

Profit outflows from the financial businesses dropped to $5.1 million in July-September FY2023 from $78.5 million a year ago.

The outflows from the oil and gas exploration sector fell to $0.4 million from $1.4 million.

The decline in the repatriated earnings of foreign firms has been attributed to the slowdown in corporate profitability. Additionally, a new wave of political uncertainty is predicted to erode foreign investors' confidence in Pakistan's economy.

Investors are already concerned due to recent ratings downgrades by Moody's and Fitch as well as growing concerns about the country's ability to repay its foreign debt.