Profits outflow surges by 157pc in July

Published September 8, 2020
Payments on Foreign Direct Investment surged by 168pc to $340.2 million in July, compared to $126.8m in corresponding period last year. — Reuters/File
Payments on Foreign Direct Investment surged by 168pc to $340.2 million in July, compared to $126.8m in corresponding period last year. — Reuters/File

KARACHI; The outflow of profits and dividends on total foreign investment from the country soared by 157 per cent to $354.5 million in July, as against $138.2m in the same month of 2019, reported the State Bank of Pakistan.

Similarly, payments on Foreign Direct Investment surged by 168pc to $340.2 million in July, compared to $126.8m in corresponding period last year.

On the other hand, the payments on foreign portfolio investments clocked in at a much lower figure of $14.3m during the month under review, up from $11.4m in July 2019.

The data indicates that despite negative impact of Covid-19 in the second quarter of FY20, profits on foreign investment substantially increased.

The highest outflow was noted from the food sector which rose to $99m in July, compared to a figure of zero in corresponding month last year.

Outflows from the financial sector were also very high as they jumped to $84.5m in July, compared to just $19.3m in the same month of last year. Banks earned hefty profits during FY20 due to very a steep interest rate up of 13.25 per cent, which however was drastically cut from mid of March to minimise the impact of coronavirus.

Communications came in third with payments of FDI of $61m in July, against just $6.1m in the same month last fiscal year — registering a 900pc growth over the given period. The category was led by telecommunications with outflow of $50.7m and information technology at $10.3m.

On the flip side, outflow from transport sector declined to $25.3m in July, compared to $28m in the same month of 2019. The profits outflow also fell in chemical to $14.3m, from $24.3m.

In terms of countries, the biggest payments on FDI were made to the United Kingdom at $175.7m in July, rising from just $2.8m in corresponding month last year. Malta and the United States were the distant seconds with outflows of $47.1m each during the period under review.

Published in Dawn, September 8th, 2020

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