Profit repatriation surges 74pc in July-August

KARACHI: Repatriation of profits and dividends on foreign investment in Pakistan sharply increased in the first two months of the fiscal year, as the country eased some of the capital controls that were imposed to cope with a dollar shortage, central bank data showed.

The repatriation of profits and dividends on foreign investment rose 74.46 percent to $49.2 million in July-August, compared with $28.2 million in the same period a year earlier, according to data from the State Bank of Pakistan.

Profit repatriation on foreign direct investment rose to $43.9 million in July-August FY2024 from $26.6 million a year earlier. Outflows of profits and dividends on portfolio investment increased to $5.3 million from $1.6 million. The government imposed import restrictions the previous year in an effort to address the balance of payments crisis. It also stopped sending dollars abroad in a bid to stem capital flight and support the rupee.

Easing import restrictions was one of the conditions of the International Monetary Fund's $3 billion bailout package for Pakistan. As a result, backlogs for imported goods and services began to clear in July and August, and foreign corporations also began remitting earnings and profits home. According to the SBP data, foreign companies from the United Arab Emirates operating in Pakistan repatriated $28.6 million to their home offices between July and August of FY2024, up from $4.3 million in the same period last year.

Chinese companies returned $14.3 million to their home country during the two months of this fiscal year, up from $3.1 million a year earlier. The petroleum refining sector repatriated abroad $27.4 million in July-August FY2024. This sector repatriated zero amounts in the same period of the last fiscal year. The mining and quarrying sector repatriated abroad $13.9 million, compared with $7.9 million a year earlier. Financial businesses repatriated abroad $3.7 million, compared with $0.3 million a year earlier.