Profit repatriation surges 112% in July-Nov

KARACHI: Repatriation of profits and dividends by multinational companies increased by 112 per cent to $1.128 billion in the first five months of the current fiscal year, underscoring unrestricted dollar outflows due to persistent improvement in the foreign exchange reserves.

In November, $321.6 million was sent home by multinational corporations and foreign investors who participated in the local stock market, a 586 percent rise over the same month last year, the central bank data showed on Wednesday. In November, however, profit outflows decreased by 22.3 per cent on a month-on-month basis.

Due to the continuous improvement in the country’s macroeconomic conditions, especially the external account, foreign businesses that operate in Pakistan have been sending a sizable portion of their repatriated income home. However, the month-on-month decline in profits and dividend repatriations is due to the government’s clearance of all pending payments, as there are no restrictions on capital outflows from foreign investors in Pakistan.

The country’s official foreign exchange reserves rose from $4.44 billion in June 2023 to $12 billion as of December 6, 2024, providing an import cover of over two months. Pakistan posted a current account surplus of $729 million in November. This compares to a surplus of $346 million in the previous month and a deficit of $148 million in November 2023.

November marked the fourth consecutive month of surplus. Over the first five months of the fiscal year 2025, Pakistan posted a current account surplus of $944 million, in contrast to a deficit of $1.67 billion during the same period last year.

Pakistan’s net foreign direct investment (FDI) increased by 31 per cent, reaching $1.124 billion in the first five months of this fiscal year. In November, the country experienced a net FDI inflow of $219 million, which reflects a 27 per cent rise compared to the $172 million inflow during the same period last year. This figure also represents a 65 per cent increase over the $133 million received in October of this fiscal year.

Data from the SBP shows that the amount of profit repatriation from FDI increased from $491.5 million in July-November of last year to $1.074 billion in July-November of FY25. Profits and dividends from investments were paid out in July-November totalled $54.4 million, compared with $40.9 million a year earlier.

The largest outflow of profits and dividends occurred in the food sector from July to November of FY25, with $246.9 million, up from $68.6 million the previous year. The financial businesses ranked second with $160.3 million in repatriations, followed by the power sector with $156.6 million in outflows during the first five months of the current fiscal year.