Foreign profit outflow up 86% as Pakistan eases restrictions

Foreign investors repatriated $751.7 million in profits and dividends from Pakistan during the first quarter of fiscal year 2025-26 (FY26), marking an 86% increase compared to $404.5 million in the same period last year.

According to data released by the State Bank of Pakistan (SBP), most outflows were attributed to returns on Foreign Direct Investment (FDI), which surged 92.5% year-over-year to $734 million, up from $382 million in Q1 FY25.

In contrast, profit repatriation on Foreign Portfolio Investment (FPI) — investment in stocks and bonds — declined to $17 million, down from $23 million a year earlier.

The sharp rise in repatriation, driven primarily by improved corporate earnings and the easing of foreign exchange restrictions earlier this year, reflects renewed investor confidence despite ongoing macroeconomic challenges.

Country-wise profit repatriation

China led all countries in repatriated profits, with $205 million sent out during the quarter, followed by the United Kingdom with $162 million, the Netherlands with $92 million, and the United States with $69 million.

In July alone, profit repatriation soared 75% year-over-year to $244 million, as the State Bank of Pakistan lifted restrictions on profit and dividend transfers. The relaxation spurred a monthly outflow of $159 million, including $143.2 million from FDI and $15.8 million from FPI.

Key contributors to the improved earnings and repatriation figures included the banking and financial services sector, which accounted for 73% of total member assets, reflecting robust profitability and continued sectoral expansion.

Industry analysts said the significant increase underscores the resilience and long-term commitment of foreign investors in Pakistan’s economy.

A recent report by the Overseas Investors Chamber of Commerce and Industry (OICCI) revealed that its member companies, comprising major multinationals operating in Pakistan, posted a 34% increase in profit before tax (PBT), totaling Rs1.2 trillion in 2024.

The collective turnover exceeded Rs11 trillion, with members contributing Rs2.7 trillion in government taxes and levies.