Profit, dividend repatriation jumps to $393m in Q1FY25

KARACHI: The repatriation of profits and dividends from foreign investments in Pakistan increased by 84.78 per cent to $393.4 million in the first three months of the current fiscal year, data from the State Bank of Pakistan showed on Monday.

Nevertheless, the outflows of profits and dividends on a month-on-month basis did experience a modest decrease in September of this fiscal year. Multinational firms and foreign investors who participated in the local stock market sent $118.7 million to their home countries in September, compared with $135.6 million the month before.

Due to the continuous improvement in the country’s external account, foreign businesses that operate in Pakistan have been sending home a sizable portion of their repatriated revenues since the beginning of the fiscal year 2025.

Analysts say that although the figures seem higher on an annual basis, they actually show normalised repatriation because the government stopped repatriating profits for several months last year in order to manage external liabilities. Normalised repatriation implies that the government is permitting foreign companies to move their profits overseas.

The notable rise in foreign investors’ repatriated earnings this year can be attributed to a major shift in SBP policy, which had tightened control over capital outflows in the previous fiscal year due to default risks. The SBP was able to relax its stringent controls over outflows thanks to increases in foreign exchange reserves and a decrease in the current account deficit.

The SBP’s forex reserves stood at $11.04 billion as of October 18 -- enough to cover more than two months of imports.The central bank’s removal of all unpaid dividends and earnings owing to foreign investors was blamed for the monthly decline in September’s repatriation earnings.

Data from the SBP shows that the amount of profit repatriation from foreign direct investment increased from $194.9 million in July-September of last year to $370.4 million in July-September of FY25. Profits and dividends from investments were paid out in July-September totalled $23 million, compared with $18.1 million a year earlier.

According to SBP data, the UK’s investors sent home the biggest amount of repatriated earnings during July-September FY25, totalling $145.5 million. The US came second with $56.1 million, and the UAE was third in line with $39.3 million.

In July-September FY25, financial businesses saw the biggest outflow of profits and dividends, with $88.2 million, up from $37 million last year. After $68 million in repatriations, the tobacco and cigarette industry came in second, while the transportation sector came in third with $47.4 million in outflows in the first three months of the current fiscal year.