KARACHI: Repatriation of profits and dividends from Pakistan has dropped by 19 per cent in 1QFY19, reported the State Bank of Pakistan (SBP) on Monday.

The SBP reported that profits and dividends from the country fell to $347.6 million during July-September, as compared to $427m in the same period of last year.

Foreign investment in Pakistan has been crawling up mainly due to China-Pakistan Economic Corridor but the overall situation reflects poor response from rest of the world.

The foreign direct investment (FDI) in FY18 rose to $3.09 billion compared to $2.7bn in FY17 and $2.3bn in FY16.

Payments on FDI decreased by 17.6pc or $68m during the first quarter as the country paid $318m as profits and dividends versus $386m in the same period of last fiscal year.

Outflow through payments on portfolio investment also declined to $29.3m from $41.2m in the corresponding period of last year.

It seems the situation has improved due to low outflow of dollars on foreign investment but the country is facing a crisis as far as foreign exchange reserves are concerned.

According to another SBP report, reserves of the central bank fell to five-year low at $7.825bn on Oct 19. The falling reserves bitterly jolted the exchange rate in favour of the dollar, since the rupee was further devalued to settle around Rs132-134.

However, the Saudi government’s assurance for placing $3bn in Pakistan’s dollars’ account and $3bn oil on deferred payments helped the local currency to gain against the bullish dollar.

The highest outflow was noted in the food and beverages as the two collectively amounted to $104.8m during 1QFY19 against $43m in same period last year.

Published in Dawn, October 30th, 2018