Profit Repatriation Declines by Over 81% in 9 Months of FY23 Amid Dollar Drought

Foreign company repatriation of dollars fell 81.6 percent during the first nine months of the current fiscal year, mirroring low profits and the ever-recurrent dollar shortage since last year. According to data released by the State Bank of Pakistan (SBP), the government’s policy of limiting dollar outflows had a significant impact on foreign direct investment (FDI), which fell by 83.1 percent to $194.5 million during July-March FY23 from $1.15 billion in 9MFY22. Foreign companies remitted $233 million in profits and dividends during 9MFY23, compared to an outflow of $1.26 billion during the same period in 9MFY22, a substantial 81.6 percent decrease. Profit outflows in March were $7.7 million, compared to $4.9 million in February. SBP has been attempting to manage the shortfall of foreign currencies by restricting imports, but this has resulted in raw material shortages impeding industrial activities, particularly in export-oriented sectors. Profit payments on FDI during 9MFY23 were $194.5 million compared to $1,152.3 million the previous year. Profit outflows from foreign portfolio investment (FPI) were $38.6 million in 9MFY23, compared to $115.3 million the previous year. Mining and quarrying had the highest outflow during the 9 months, totaling $124.9 million compared to $132.2 million in the same period last year. Profit outflows from the manufacturing sector fell from $403 million in the same period last year to $29.3 million in 9MFY23. The outflow from the financial and insurance sector, which is still profitable despite the bad economy, fell to $18.4 million this year, down from $188.5 million in 9MFY22. Outflows from the electricity, gas, steam, and air-conditioning sectors totaled $35.4 million in 9MFY23, compared to $179.8 million in the same period the previous year. Meanwhile, profit outflows from the information and communication sector fell to $9.8 million from $71.2 million the previous year.