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