KARACHI: Profit and dividend repatriation on foreign investments in Pakistan more than doubled year-on-year in the first two months of the current fiscal year, surpassing inflows of foreign direct investment (FDI), according to data released by the State Bank on Friday.

The outflow reached $593 million during July-August FY26, up 115pc or $318m from $275m in the same period last year. In contrast, FDI during the same period stood at $364m, reflecting a 22pc decline year-on-year. This means repatriated profits exceeded FDI inflows by $229m.

The increase in outflows comes amid pressure from international lenders such as the IMF and World Bank for Pakistan to allow freer movement of foreign capital, including profit repatriation. The trend may continue in the coming months, further straining the external account.

Country-wise, China emerged as the largest recipient of repatriated profits, receiving $205.6m during the two-month period compared to just $20.5m last year. The UK received $96.5m, the Netherlands $87m, the UAE $45m, and the US $42m.

Outflows surpass FDI as outward remittances swell to $593m

Sector-wise, the power sector led with $170m in profit outflows, underlining continued foreign investor dominance in this debt-laden segment. The banking sector followed with $135m, more than double the $60m repatriated last year. According to the State Bank, local banks have posted strong profits largely by lending to the government, a trend likely to continue amid rising fiscal needs.

Telecommunications also recorded significant outflows at $66.3m, sharply up from $5.4m in the same period last year. The food sector saw $35m repatriated, roughly unchanged from the previous year.

The growing gap between foreign investment inflows and profit repatriation adds to Pakistan’s ongoing challenges in managing its balance of payments and attracting sustainable foreign capital.

Published in Dawn, September 20th, 2025