KARACHI: The repatriation of profits and dividends in July this year surged compared to the same month last year, reflecting a major policy shift by the State Bank of Pakistan (SBP), which had maintained stringent control over outflows during the previous fiscal year.

According to the latest data released by the SBP on Wednesday, profit and dividend outflows reached $139.1 million this July, a sharp rise from just $2.2m in the same month last year. This stark contrast reflects the change in policy regarding profit outflows from the country.

Throughout FY24, the State Bank tightly restricted dollar outflows, especially during the first half of the fiscal year. However, following the $3 billion Standby Facility agreement with the International Monetary Fund (IMF), the policy was relaxed, allowing profits to flow out of the country. By the end of FY24, total profit outflows amounted to $2.12bn, much higher than the $331m outflows in FY23.

The data reveals that the highest outflows in July were linked to the power sector, which has faced widespread criticism from both the public and the business community due to the soaring electricity prices in Pakistan.

Some experts have pointed out that electricity prices in the country are among the highest in the world. Within the power sector, the thermal power segment, largely operated by independent power producers (IPPs), accounted for $28.3m of the total $29.5m in outflows.

The second-largest outflow was $22.1m for the tobacco and cigarette sector, which saw no outflows in July last year. Other notable outflows included $21.2m for the transport sector (zero in July last year), $16.1m for financial businesses (zero a year ago), $13.5m for chemicals ($0.2m a year ago), and $6.6m for food (zero a year ago).

Published in Dawn, August 29th, 2024