According to statistics released by the State Bank of Pakistan (SBP) on Tuesday, the repatriation of profits and dividends in the first nine months of the current financial year (FY) 2016-17 has risen to $1.33b. This begs the question to the advantages of foreign investment in the country since the outflow of dividends and profits was recorded at $1.3b in the current quarter. The percentage of repatriations tends to reach its peak in the last quarter of the financial year and touches to the tune of $2b by the end of June.
Remittances sent by Pakistani’s from abroad registered a year on year decrease at the end of the current quarter of 2016-17, while the trade deficit reached its highest level ever which put Pakistan’s external sector under the scanner. Due to current deficit reaching over $6b by the end of March, the government has been struggling to keep the foreign exchange reserves at more than $20b.
As per the SBP report, the figures for the payment of Foreign Direct Investment (FDI) were recorded at $1b in the first nine months of FY 2016-17, which were a touch more in comparison to the previous year. In regards to payments on foreign portfolio, the figures largely remained unchanged which were $260m in comparison to $268m a year ago.
The pundits believe that due to increase in the current account deficit in this FY 2016-17, this has negatively impacted the country’s status in the international bond market. This would translate into Pakistan requiring paying a higher interest rate on loans taken from international institutions.
Financial businesses were responsible for repatriating $191.3m during this nine month period and the food sector disbursed an amount to the tune of $161.3m abroad. The repatriations from oil and gas exploration, petroleum refining and chemical sectors were recorded at $102m, $92.9m and $87m.
