Profit repatriation surges 90% in first seven months of FY25

The outflow of profits and dividends from Pakistan surged by 90% in the first seven months of FY25, despite declining foreign exchange reserves and external financing challenges. 

According to the data released by the State Bank of Pakistan (SBP), profit repatriation reached $1.317 billion between July and January, compared to $694 million in the same period last year.

Although January saw a slight decline in profit outflows, the first half of FY25 recorded a 114% increase year-on-year, reflecting the government’s decision to ease restrictions on repatriation following an IMF-backed reform program. 

The United Kingdom emerged as the largest recipient of repatriated profits, with $434 million sent in 7MFY25, a sharp rise from $91 million last year. China, Pakistan’s biggest investor, accounted for only $94 million in outflows, while U.S. investors remitted $166 million, up from $43 million. 

Meanwhile, UAE-bound outflows fell to $145 million from $177.5 million, while Hong Kong saw a significant jump, receiving $70 million compared to just $1.3 million last year.

The manufacturing sector led the outflows, with $449.2 million repatriated in 7MFY25, more than double last year’s $186 million. The wholesale and retail sector followed with $241.5 million, while the energy sector accounted for $184 million, finance and insurance $164 million, and transportation and storage $108 million.

During FY24, dollar outflows were restricted to prevent a further decline in foreign reserves. However, the IMF and foreign investors criticized the curbs, prompting the government to resume allowing multinationals to repatriate profits after securing a $7 billion Extended Fund Facility (EFF) in September 2024.

Financial experts noted that higher repatriation reflects increased investor confidence in economic stability, but warned that foreign direct investment (FDI) outside the equity market remains limited. With Pakistan aiming to attract fresh investments, experts believe sustained economic reforms and a stable regulatory environment are essential to maintaining investor trust.