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Profit repatriation increases 12pc in July-Nov

Business

January 1, 2021

KARACHI: Repatriation of profits and dividends on foreign investment in Pakistan increased 11.64 percent to $748.1 million in the five months of this fiscal year, the central bank data showed on Thursday.

The State Bank of Pakistan’s (SBP) data showed profit outflows amounted to $670.1 million in the same period of last fiscal year. However, the repatriated earnings declined to $69.4 million in November from $101.9 million a month earlier.

The highest outflows from the food sector were recorded at $161.9 million in July-November FY2021. These outflows stood at $48.6 million in July-November FY2020.

Profit outflows from the communications sector increased to $119.4 million from $7.2 million.

Financial businesses repatriated $92.5 million in July-November FY2021, which was lower when compared with $140.5 million in the corresponding period of FY2020.

The profit outflow from the transport sector was $69.3 million in the five months of the current fiscal year. Multinational companies sent $78.6 million earnings to their headquarters overseas in the same period of last year.

The SBP’s data showed that $296.5 million was repatriated to the United Kingdom in five months, followed by the United States ($115.1 million) and Malta (91.7 million).

The State Bank of Pakistan’s data revealed that profits on the foreign direct investment went up, but profits on portfolio investment sharply decreased.

Profit outflows on FDI were $707.5 million in July-November FY2021, compared with $600 million in the corresponding period of last year. However, the outflow as payment against portfolio investment stood at $40.6 million. That compared with $70.1 million in July-November FY2020.

The rise in the repatriated earnings reflects the higher profitability of the foreign companies making investments in Pakistan.

Improvement in the macroeconomic indicators including stable external outlook have helped boost confidence of foreign investors in the country’s economy. It’s expected that the economic impact of the second wave will be limited as businesses continue as usual.

Pakistan’s economy that was already tottering before the coronavirus was further mauled by monthslong lockdown.

The SBP estimated that Pakistan’s real GDP contracted by 0.4 percent in the fiscal year 2019/20, making it the first time since the fiscal year 1951-52 that the country recorded a negative economic growth. The central bank expects the economy to grow in the range of 1.5 to 2.5 percent for the current fiscal year of 2020/21 as it says there has been a visible rebound in economic activity after easing in mobility restrictions.