Foreign firms repatriate $1.194bln in 10 months

KARACHI: Outflow of profits and dividends on foreign investments from the country dropped 3.47 percent to $1.194 billion in 10 months of the current fiscal year, mainly owing to limited or stagnant economic activities under a COVID-19 pandemic-led lockdown, central bank data showed on Wednesday.

Repatriation of profits and dividends stood at $1.237 billion in the same period last year, according to State Bank of Pakistan (SBP).

The country paid $190.4 million as profits and dividends in April, compared with $30.7 million in March.

The slowdown in the profits and dividends from the foreign businesses is due to the squeeze in the profit margins of the various companies operating in Pakistan. These firms remained shut or their activities were limited for two months due to the novel coronavirus COVID-19 lockdown.

So, the multinational companies earned less profit and hence had repatriated less earnings to their headquarters overseas in the period under review.

Furthermore, depreciation in exchange rate also contributed to the reduction in repatriated earnings of multinational companies in July-April FY2020.

The payments on foreign direct investments (FDI) stood at $1.064 billion in July-April FY2020, compared with $1.035 billion a year earlier.

The payments on foreign portfolio investments were $130.4 million.

That compared with $202.0 million in the same period last year.

The central bank’s data showed that some important sectors such as food, power and communications remitted lower profits to their parent companies abroad.

Food sector repatriated $59.3 million in July-April FY2020, compared with $86.3 million in the same period last year.

The power sector repatriated $68 million worth of profits, whereas it had repatriated $103.7 million profits last year.

Outflow of profits from telecommunications amounted to $64.8 million during July-April FY2020. The outflows were $101.6 million in the corresponding period last year.