Profit repatriation by foreign firms surges 114% to $1.215bn in first half of FY25

Foreign firms operating in Pakistan repatriated $1.215 billion in profits and dividends during the first half (July-December) of the current fiscal year FY25, marking a 114% increase compared to the same period last fiscal year, according to data released by the State Bank of Pakistan (SBP).

The firms belonging to the UK led the profit outflows, with $423.7 million repatriated in H1FY25, a significant jump from $72 million during the same period last fiscal year. The United States companies followed with $158.4 million, the UAE firms with $145 million, and Hong Kong firms with $68 million. 

China, Pakistan’s largest investor in recent years, ranked fourth, receiving $91 million compared to $39 million last year.

Sector-wise, the manufacturing industry accounted for the largest share of repatriated profits, totaling $432.8 million, followed by wholesale and retail ($239.2 million), electricity, gas, and other utilities ($168.5 million), finance and business services ($163.6 million), and transport and storage ($91.5 million).

This sharp rise in repatriation follows the easing of restrictions imposed by the government last year to conserve foreign exchange reserves. The restrictions, heavily criticised by foreign investors, were a sticking point in Pakistan’s negotiations with the International Monetary Fund (IMF). 

As part of the conditions for a new $7 billion Extended Fund Facility, the IMF urged Pakistan to ease curbs on imports and remittances by multinational companies. Pakistan secured the first $1 billion tranche in September 2024 under this arrangement.

Foreign direct investment (FDI) in Pakistan increased by 20% to $1.3 billion during July-December FY25, up from $1.1 billion in the same period last year. However, experts noted that Pakistan’s FDI inflow remains the lowest in the region and has stagnated at this level for several years.

Despite a 33% increase in workers remittances and an improvement in foreign exchange reserves to $11.5-$12 billion, the reserves provide just 2.5 months of import cover, reflecting a fragile economic position. The SBP aims to bolster reserves to $13 billion by the end of FY25.