Profit repatriation outpaces FDI as foreign investors pull $593M from Pakistan
Outflows in July-August more than double last year’s level, exceeding new investment inflows by $229 million
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Foreign investors pulled USD 593 million in profits and dividends from Pakistan during the first two months of the current fiscal year, more than double the amount repatriated in the same period last year and significantly higher than the inflow of foreign direct investment (FDI), according to data from the State Bank of Pakistan.
The July-August outflow marks a 115% increase from USD 275 million repatriated in the same period last fiscal year.
Meanwhile, FDI fell 22% year-on-year to USD 364 million, meaning repatriated profits exceeded new investment inflows by USD 229 million.
The reversal of capital flows comes as Pakistan faces increasing pressure from international lenders, including the International Monetary Fund and the World Bank, to ease restrictions on foreign exchange and allow freer movement of capital, including profit repatriation.
Analyst warns of structural imbalance
“The fact that more money is leaving the country than coming in through FDI highlights a fundamental imbalance,” said an analyst. “This could complicate Pakistan’s external financing position and sends the wrong signal to potential long-term investors.”
Country-wise data showed that China received the largest share of repatriated profits at USD 205.6 million, a steep rise from USD 20.5 million in the same period last year.
The United Kingdom followed with USD 96.5 million, while the Netherlands received USD 87 million.
The United Arab Emirates and the United States saw outflows of USD 45 million and USD 42 million, respectively.
Power, banking sectors see largest outflows
By sector, the power industry topped the list with USD 170 million in outflows, reflecting continued foreign investor dominance in the heavily indebted sector.
The banking sector followed with USD 135 million—more than double the USD 60 million repatriated a year earlier—fueled by strong bank earnings largely tied to government lending.
Telecommunications also saw a sharp surge in outflows, reaching USD 66.3 million compared to just USD 5.4 million last year. The food sector posted USD 35 million in repatriated profits, roughly unchanged year-on-year.
Concerns over balance of payments
The widening gap between profit repatriation and new foreign investment could weigh heavily on Pakistan’s already fragile balance of payments.
Economists warn that unless the country can attract more stable, long-term investment, short-term capital outflows will continue to pressure foreign exchange reserves and the broader economy.
“Pakistan needs to shift from reliance on consumption-driven inflows to sustainable, productive investment,” analyst said.
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