KARACHI: Repatriation of profits and dividends nearly trebled to $145.8 million in July from $52.5m in the same month last year.

During the preceding fiscal year, the amount of profits repatriated by foreign companies operating in Pakistan stood at $2 billion, which was the second biggest payment after debt servicing for the country.

While the country has been facing many odds on external front despite record foreign exchange reserves — the exports are declining and remittances are falling — a rise in repatriation of profits and dividends will only add to its woes.

Foreign firms repatriated $2bn in 2015-16

Moreover, foreign direct investment (FDI) inflows shrank to $64m in July compared to $75m a year ago. The country could hardly receive $1.2bn FDI in the previous fiscal year.

The country is already under stress to meet the trade deficit which was close to $21bn in 2015-16. The gap did not allow the country to come out of the current account deficit despite record inflows of remittances.

The country received about $20bn remittances in 2015-16 which helped

the country to meet the trade gap and reduce the current account deficit, while succeeded to keep the foreign exchange reserves at $23bn.

The country paid $5.3bn in debt servicing in the preceding fiscal year. This means the collective payments of debt servicing and profits were above $7bn.

The uptrend shows the country would be under pressure to arrange more than $7bn in the current fiscal year. It will be hard for Pakistan to keep its foreign exchange reserves at the current level.

Falling remittances could add more worries for the government struggling to increase exports, which have been declining for last two years.

July remittances fell 20pc mainly because thousands of Pakistanis working in the Middle East, particularly in Saudi Arabia, lost jobs and their payments were held by their employers. However, the Saudi government has recently pledged to clear their dues.

Published in Dawn, August 28th, 2016