KARACHI: The outflow of profits and dividends on foreign investments shrank to a fifth of its last year’s value in the first nine months of the current fiscal year, the central bank data showed on Thursday.

The State Bank of Pakistan (SBP) reported that the outflow during July-March was $233 million compared to $1.27 billion a year ago — a drop of 81.6pc, or $1.034bn.

Since low foreign exchange reserves have been a major headache for the government, the financial sector believes that the outflow was deliberately curtailed to save the country’s foreign currency holdings.

This drastic slash in profit outflows has impacted foreign direct investment (FDI). During the first nine months of the current fiscal year, the inflows fell 22.6pc per cent to $1.048bn.

Pakistan attracts the lowest FDI in the region and inflows have been declining for the last three years, from $2.6bn in 2019-20 to $1.9bn in FY22.

Foreign investors are wary of the uncertain political and economic situation in Pakistan. Besides, they could not be attracted to invest in domestic bonds with 22pc returns on treasury bills. Sources said that not all sectors were in decline, but the outflow of profits was extremely limited.

The profits outflow from financial business (banks) during July-March was $18.5m against $189m in the same period last year.

Similarly, the food sector outflow fell to just $0.7m against an outflow of $126m in the same period last year. The profits in the food sector have not declined but the outflows were almost stopped.

The profit-making power sector presented the same situation, as it could hardly send out $34.8m in July-March compared to $178.4m a year ago.

The power tariff has been on the rise during this fiscal year, playing a major role in driving inflation up to 35.4pc in March. However, profits outflow was curtailed on a large scale.

The profits outflow was $9.9m against $108.2m a year ago in the communication sector, $15.2m versus $88.7m in the chemical sector, and $3.4m against $63.8m in the tobacco and cigarettes sector.

However, profits outflow from oil and gas exploration was significant at $87.5m compared to $109.5m last year. The mining and quarrying

sector presented a similar trend, with a $33m outflow compared to $26.6m last year.

Published in Dawn, April 28th, 2023

Opinion

Editorial

Time to deliver
Updated 11 Nov, 2024

Time to deliver

Pakistan must display a serious commitment to climate change adaptation and mitigation at home.
Smaller government
11 Nov, 2024

Smaller government

THE IMF bailout programme has put the government under pressure to curtail its spending, especially current...
Unsafe inheritance
11 Nov, 2024

Unsafe inheritance

DESPITE regulations, the troubling practice of robbing women of their rightful inheritance — the culprits are ...
Quetta bombing
Updated 10 Nov, 2024

Quetta bombing

THERE appears to be no end to the stream of violent incidents occurring in Balochistan, indicating a clear failure ...
Burdened courts
10 Nov, 2024

Burdened courts

ACCORDING to recent reports, the new chief justice has set about implementing a recently adopted plan for clearing...
Playing in Pakistan
10 Nov, 2024

Playing in Pakistan

MOHSIN Naqvi, Pakistan’s cricket chief, has shown a brave face. Now he has to be unrelenting and put the onus on...