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January 24, 2020

Profit repatriation rises to $836.3mln in July-Dec

Business

January 24, 2020

KARACHI: Repatriation of profits and dividends increased 10.11 percent to $836.3 million in the first six months of the current fiscal year from $759.5 million a year earlier, mainly owing to improved earnings, the central bank data showed on Thursday.

State Bank of Pakistan (SBP) figures presented that in December, profits sent overseas by multinational firms operating in Pakistan were recorded at $166.2 million.

Analysts said foreign companies posted higher repatriated earnings in the period under review due to some improvement in economic activities, stable currency, and increased corporate profitability. However, others believe a persistent rise in profit repatriation was not a good sign for the country’s current account balance.

The current account deficit narrowed 75 percent to $2.153 billion in the first six months of the current fiscal year. The profit repatriation was lower than the net foreign direct investment (FDI) attracted by the country in the period under review. The FDI into Pakistan surged 68.3 percent to $1.340 billion in first half of FY20.

The State Bank of Pakistan data also showed that amount of repatriated cash on FDI rose to $743.2 million in the six months of this fiscal from $628.8 million a year ago. On foreign portfolio investment, it however fell to $93.1 million from $130.7 million.

All major sectors repatriated higher profits, compared with last year. Oil and gas exploration sector repatriated $118.8 million in the first half of FY20, against $79.2 million in the corresponding period last fiscal.

The SBP’s figures showed that profit outflows from financial businesses increased to $155.6 million from $113.2 million. The chemical sector companies repatriated $85.2 million, while they had sent $35.6 million to their respective countries in the same period of FY19.

The transport sector repatriated $139.5 million in six months of this fiscal year, compared to $32.6 million last year. The country saw highest profit outflows to United Kingdom, followed by the United States of America.

The British companies sent $176.3 million to their headquarters in July-December FY20, compared with $171.9 million last year, while the US investors repatriated $132.8 million, against $125.8 million a year ago.