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

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Plugging the gap
06 May, 2024

Plugging the gap

IN Pakistan, bias begins at birth for the girl child as discriminatory norms, orthodox attitudes and poverty impede...
Terrains of dread
Updated 06 May, 2024

Terrains of dread

Restored faith in the police is unachievable without political commitment and interprovincial support.
Appointment rules
Updated 06 May, 2024

Appointment rules

If the judiciary had the power to self-regulate, it ought to have exercised it instead of involving the legislature.
Hasty transition
Updated 05 May, 2024

Hasty transition

Ostensibly, the aim is to exert greater control over social media and to gain more power to crack down on activists, dissidents and journalists.
One small step…
05 May, 2024

One small step…

THERE is some good news for the nation from the heavens above. On Friday, Pakistan managed to dispatch a lunar...
Not out of the woods
05 May, 2024

Not out of the woods

PAKISTAN’S economic vitals might be showing some signs of improvement, but the country is not yet out of danger....