KARACHI: The profits and dividends on foreign investments fell by 83 per cent in the first 10 months of the current fiscal year, the central bank data showed on Friday.

The foreign investment already dropped 29pc in April, leaving no hope for the investors, particularly after maximum profits were held up to keep the country liquid with dollars.

The State Bank’s data showed the outflow of profits during July-April was just $253.4 million compared to $1.46bn a year ago. The foreign investment in Pakistan is the lowest in the region (except Afghanistan), while the new strategy to hold back profits could further shake up investor confidence.

The 10-month decline in foreign investment was 13pc compared to last year, which is already an indication of the investors’ approach towards Pakistan.

The country has been facing political and economic uncertainties for more than a year, while all macroeconomic indicators during this fiscal year are grossly negative. Inflation and interest rates are record high, while the economic growth rate is estimated at minus 3pc.

Most researchers and analysts believe that the situation is not suitable for any kind of investments, not even domestic investments, as it is reflected by a 90pc decline in credit off-take by the private sector from banks.

The financial sector (banks and insurance) remained profitable despite poor economic activity, but their profit outflow was just $21.7m during the 10 months through April compared to $251m in the year-ago period.

However, the biggest fall was noted in the case of the manufacturing sector, as the outflow of profits during the period was just $30.4m compared to $456m a year ago. The sector is the biggest victim of negative economic growth during the current fiscal year. It is also reflected in declining exports and domestic consumption.

Published in Dawn, May 27TH, 2023

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