Foreign firms send home $1.60 billion in July-May FY22

KARACHI: Profit and dividends earned by foreign firms increased 6.95 percent in 11 months of this fiscal year, central bank data showed on Monday, due to better corporate profitability and hopes of International Monetary Fund (IMF) programme revival.

Repatriation in the July-May FY2022 period increased to $1.60 billion, compared with $1.496 billion sent by the multinational companies (MNCs) to their headquarters overseas in the same period of last fiscal year.

In May, foreign firms sent home $136 million worth of profits and dividends. Data issued by the State Bank of Pakistan (SBP) further revealed that foreign firms repatriated profit of $1.447 billion against the foreign direct investments in various businesses in July-May FY2022. That compared with $1.382 billion in the corresponding period last year.

Moreover, they made a profit worth $153.3 million against investments in shares at the local bourse. These earnings stood at $114.2 million a year earlier.

Power, oil and gas exploration, chemicals, and information technology contributed to the increase in the profit outflows in 11 months of the current fiscal year. The outflows from the power sector registered at $198.8 million in July-May FY2022. These outflows amounted to $45.2 million in the corresponding period of last year.

Oil and gas sector outflows rose to $146.2 million from $107.9 million. Profit outflows from the chemicals sector increased to $116.1 million from $110.7 million, whereas IT sector sent back $40.6 million from $19.6 million last fiscal.

Foreign firms have been seeing an increase in their earnings. The confidence of foreign investors in Pakistan’s economy has started recovering due to the expectations for the resumption of the International Monetary Fund loan after the government took unpopular measures to secure IMF funding.

The increase in profit repatriation on foreign investment is not a positive development for the balance of payments. It contributes to a deteriorating primary income account deficit. The country recorded a current account deficit of $13.8 billion in 10 months of FY2022 against $543 million a year ago. The surge in the current account gap was attributed to higher import payments amid a spike in global fuel prices and other commodities.