KARACHI: The outflow of profits and dividends on foreign investment in Pakistan witnessed a decline of 16.5 per cent during the first four months of the current fiscal year (4MFY22).

The State Bank of Pakistan (SBP) reported that outflow of profits fell to $566.6 million compared to $678.6m during the same period in FY21.

The biggest outflow was from banks indicating that financial business in the country was in the best shape yielding highest profits. Almost all banks showed profits in their annual and quarterly reports. The profits outflow during July-Oct FY22 was $125m against an outflow of $91m in the same period of FY21.

However, highest jump in the profits outflow was noted in the power sector. The profits outflow from this sector rose to $72.8m compared to just $9.3m in the same period of FY21. Within the power sector, thermal power saw an outflow of $69.2m compared to $8.5m during 4MFY21.

The food sector noted the biggest decline of profits outflow during 4MFY22. The outflows during this period fell to $84.2m compared to a profit outflow of $161m during 4MFY21.

The profits outflow from communications also noted a decline to $89.3m during this period compared to $118.7m of previous fiscal year. Within communications, the outflow from telecommunications dropped to $52m compared to $104m while the profits outflow from IT sector increased to $37m compared to 14.8m of previous fiscal.

The profits outflow from transport fell to $42m against $69m of previous fiscal while it decreased to $30.5m from the chemical sector against an outflow of $56.7m.

The profits from tobacco and cigarettes also fell significantly to $22m compared to $50m of the previous fiscal year.

The macro indicators of the economy show a better growth trend during FY22 but the outflow of profits showed a decline. Analysts believe foreign investors were reinvesting their profits in the country as they see higher growth in several sectors.

However, fresh foreign investment declined by 12pc during 4MFY22. The SBP data shows the FDI during July-Oct FY22 was $662m compared to $750m in the same period of FY21.

Foreign investment also eroded from the domestic bonds market as the outflow from Treasury bills and Pakistan Inves­tment Bond were much higher than the low inflows. The investment outflow from equ­ity market during FY22 was also very high.

Published in Dawn, November 28th, 2021