KARACHI: Outflow of profits and dividends on foreign investments dropped 75.6 percent to $217.3 million in first half of the current fiscal, central bank data showed on Tuesday, as government limited dollar repatriations amid dwindling reserves.
Foreign reserves have been depleting rapidly
as there is a chronic lack of dollars in the country.
The central bank’s foreign exchange reserves stand at $4.6 billion as of January 13, and Pakistan, which is in the midst of an economic crisis now has only one month’s worth of import coverage.
The State Bank of Pakistan (SBP’s) data showed that the profit repatriation on foreign direct investment dropped to $182.5 million in July-December FY2023 from $794 million a year earlier.
The outflow as payment against portfolio investment fell to $34.8 million, compared with $97.2 million in July-December FY2022.
The figures issued by the State Bank of Pakistan showed that financial businesses sent home $17.3 million in repatriated earnings in July-December FY2023, compared with $163.3 million in the same period last year.
The outflows from the power sector fell to $31.8 million from $95.1 million a year earlier.
Profit outflows from the telecommunications sector declined to $4.3 million from $90 million.
Pakistan’s external debt servicing obligation for FY23 is $23 billion, of which $6 billion has been repaid and $4 billion rolled over, leaving $13 billion yet to be funded.
The country has further repayment obligation of $75 billion during FY2024-2026. Despite a severe import crunch leading to significant unemployment, the current account deficit is running at about $8 billion and there is a substantial backlog of dividends and other remittances.
The country has a liberal foreign investment policy that allows 100 percent profit repatriation. However cash-strapped country, already reeling from low foreign reserves and mounting international debt, placed announced barriers on repatriating of multinational revenues.
Last month International Air Transport Association (IATA) said Pakistan had blocked a whopping $225 million in airlines’ repatriation funds.
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