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KARACHI: The profits and dividends on foreign investments in Pakistan fell sharply down to an insignificant level in the first month of the current fiscal year, suggesting the poor economic performance.
The State Bank of Pakistan’s latest data showed that the outflow of profits and dividends on foreign investments, mostly foreign direct investment (FDI), in July was just $16.5 million compared to $159.2m in the same month last year.
The July outflow was much less than the June outflows of $50.6m reflecting the slowdown of the economic growth while the inflow of the FDI has also gone down.
The FDI in July fell by 43.3pc to $58.9m compared to $103.8m in the same month last year.
The situation is highly disappointing for investors since the country is badly hit by flash floods while the inflows of dollars from creditors still remained a dream.
The economy performed well during FY22 despite a bad spell of political instability in the last quarter.
The repatriation of dollars was even higher than the FDI recorded in FY22. The SBP data showed that the outflows totalled $1.651bn while the FDI was $1.47bn the same year showing a good output of the companies having foreign investments.
While the foreigners were reluctant to invest in Pakistan due to increased risks associated with the declining payment capacity of the country, the IMF’s tough preconditions for the resumption of loan programme remained a new obstacle and kept them alerted.
The preconditions of IMF will ultimately slow down the economic growth from 6pc to 3pc.
The data reveals that the highest outflow was from mining and quarrying which was $7.9m in July compared to zero in the same period last year.
In July 2021, the outflow of profits was $62.5m including $46.6m alone from telecommunication. This year the outflow is zero.
Food packaging recorded an outflow of $26.8m in July 2021 while this year it’s zero. The outflow from financial businesses (banks) was zero in July FY23 but it was $23.3m in the same month last year.
Published in Dawn, August 28th, 2022
