KARACHI: The repatriation of profits and dividends from Pakistan in the first quarter of the current fiscal year was $335 million, which is slightly lower than the outflow recorded in the comparable period of the last fiscal year.
The State Bank of Pakistan (SBP) reported on Tuesday the outflow of profits and dividends was dominated by sectors that were different from ones that dominated repatriations in the first quarter of the last fiscal year.
The outflow from Pakistan in July-Sept of 2015-16 was $359m, which was $24m higher than the 2016-17 figure.
However, the year-on-year decline in Foreign Direct Investment (FDI) in the first quarter of the current fiscal year was 38 per cent. It shows that while the inflows in the form of FDI have declined sharply, the outflow of profits and dividends has registered a smaller decrease over the same period.
The gap in FDI inflows and repatriations can be problematic for the country that is depending largely on borrowed foreign exchange reserves. In 2015-16, the total outflow of profits and dividends reached $2bn.
Since Pakistan lags behind in attracting foreign investment, the soaring outflow of funds in the form of profits and dividends can create hurdles for the country in meeting its foreign obligations.
It is also reflected in the increasing current account deficit, which rose 136pc year-on-year to $1.368bn in the first quarter of the current fiscal year.
The highest outflow during the quarter was recorded from the petroleum refining sector ($69m). Outflows from financial business and power sectors remained $61.7m and $37.8m, respectively.
Published in Dawn October 26th, 2016