$1 bil­lion repa­tri­ated as prof­its in July-Jan: SBP

The Pak Banker - - FRONT PAGE -

KARACHI: The out­flow of prof­its and div­i­dends in the first seven months (July-Jan) of this fis­cal year crossed $1 bil­lion mark, which was 23 per cent higher than the net in­flow of for­eign in­vest­ments dur­ing this pe­riod, the State Bank of Pak­istan (SBP) re­ported to­day. The ris­ing out­flow of prof­its and div­i­dends poses a chal­lenge for the govern­ment de­spite the fact that the coun­try has record for­eign ex­change re­serves of over $20bn. In ad­di­tion, for­eign in­vest­ment in­flows have fallen to al­most neg­li­gi­ble size com­pared to re­gional coun­tries like In­dia.

Ac­cord­ing to an­other SBP re­port, the net for­eign in­vest­ments in the coun­try dur­ing the first seven months of the cur­rent fis­cal were $815 mil­lion. Though the ris­ing re­mit­tances helped the coun­try to fill this gap, the in­creas­ing size of the repa­tri­a­tion of prof­its and div­i­dends could be a tough task, par­tic­u­larly in the wake of fall­ing oil prices. Cheaper oil has mas­sively re­duced the in­come of Middle East coun­tries, from where over 65 per cent re­mit­tances are be­ing sent to Pak­istan. Th­ese coun­tries are not in a po­si­tion to ab­sorb more labour­ers which may cause de­cline in re­mit­tances. The de­tails showed that the high­est prof­its were sent abroad by the fi­nan­cial busi­ness which rose to $254m dur­ing the seven months. Telecom­mu­ni­ca­tions re­mai ned an at­trac­tive sec­tor for in­vestors which have been pay­ing large prof­its. Dur­ing this pe­riod, the sec­tor paid $94.5m prof­its and div­i­dends; it at­tracted $75m as for­eign di­rect in­vest­ment (FDI) dur­ing the same pe­riod. The power sec­tor, which is still at­trac­tive for for­eign in­vestors, paid a to­tal $132.9m as prof­its and div­i­dends com­pared to $334m FDI. The food sec­tor which wit­nessed dis­in­vest­ment of $11.5m dur­ing the sev­en­month pe­riod paid a net prof­its and div­i­dend of $78m. In FY15, the coun­try paid $1.632bn as prof­its and div­i­dends to for­eign in­vestors. It was a big amount since the coun­try has to pay a large in­ter­est in case of bor­row­ing $1bn from the in­ter­na­tional mar­ket or from donors.

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