KARACHI: According to the latest data of the State Bank of Pakistan (SBP), return of profits and profits on foreign investment in Pakistan fell by 80.4 percent to $313.1 million in the 11 months of the current fiscal year.
In May, multinational companies doing business in Pakistan and foreign investors in the stock market repatriated $59.7 million in profits and gains to their home countries.
This amount is higher than the $20.2 million transferred in the previous month.
Return of profits on foreign direct investment declined to $257.2 million in July-May fiscal 2023 from $1.447 billion a year ago. Profit and loss on portfolio investments decreased to $55.9 million from $153.3 million.
According to State Bank data, Hong Kong foreign companies operating in Pakistan remitted $84.4 million to their home offices between July and May of FY23, up from $125.1 million in the same period last year. is less than a dollar.
Chinese companies repatriated $80.5 million during the 11 months of the current fiscal year, down from $109 million a year earlier.
Capital controls due to the scarcity of the dollar in the country have reduced the return of foreign investors’ profits.
Pakistan’s foreign exchange reserves are dwindling fast, putting the country at risk of default as a result of the International Monetary Fund’s (IMF) stalled loan program.
Pakistan is awaiting an agreement with the IMF after the global lender takes the monetary and fiscal policy decisions needed to release the $1.1 billion tranche.
The country’s debt program, which has been stagnant for more than six months, ends on Friday.
IMF financing is essential for the South Asian economy, which is in a balance-of-payments crisis as its central bank’s foreign exchange reserves have fallen to just $4 billion, enough to cover a month’s worth of imports. Hardly enough. For fiscal year 2024, the nation will need $23 billion to finance its current account, repay its external debt and pay interest.
Pakistan’s economy is in crisis, and import restrictions imposed to deal with the current account deficit have hurt the country’s companies. A condition for the staff-level agreement with IMF approval was the removal of all import restrictions by the State Bank last week.
High interest rates and a deliberate policy of demand destruction aimed at curbing inflation have led to the closure of many manufacturing units and rise in unemployment. Due to these factors, the income of the enterprises has suffered a lot. As a result, they are sending less money home from abroad.
