Repatriation of profits and dividends from Pakistan up by 85% in FY25's first quarter

Pakistan's better external position has eased off the country's ability to pay, with outflows of dividends and profits in the first quarter of this fiscal year increasing significantly by 85%.

The outflow of dividends and profits, commonly known as repatriation from companies stationed in Pakistan, recorded a rise of $393 million in three months ended September 30, compared to $213 million of the same period last year, according to data shared by the State Bank of Pakistan (SBP).

The country's external position improved following an International Monetary Fund (IMF) loan package approved in July with successful completion of short-term loan package of $3 billion in April this year.

Pakistan had imposed restrictions on foreign currency outflows which created hurdles for multinational companies to send profits and dividends abroad.

The country's foreign exchange reserves plunged to $4.4 billion by the end of fiscal year 2022-23 (FY23), not even enough to cover one month import bills.

However, with better inflows from the IMF and other multilateral donor agencies, the foreign exchange reserves have now improved to $11 billion as of the week ended October 18. The foreign exchange reserves now can easily cover almost two months of import bills.

During FY24, with the ease in external position, repatriation ballooned to $2.22 billion. Pakistan witnessed the highest-ever profit and dividend repatriation since FY18, as authorities cleared the backlog. This marked a significant repatriation high in six years, said an analyst.

Outflow of profits and dividends from foreign portfolio investments (FPI) was $23 million in July-Sept FY25, as against $18 million in the same period last year.

However, there was a slight decline in monthly repatriation figures in September. Foreign firms sent $119 million on account of profits and dividends, down from $135.6 million in August.

State Bank Governor Jameel Ahmed in a press conference in July said all the pending amount of foreign companies have been paid and now there is no outstanding amount.