Profit Outflows from Foreign Investments in Pakistan Double in Third Quarter of FY 2024
Lahore:Pakistan’s foreign investment profit outflows have doubled by the end of the third quarter of the current fiscal year, according to the latest data released by the **State Bank of Pakistan**.
During the first nine months of the fiscal year 2024, the country saw a profit outflow of **$1.72 billion**, compared to **$826 million** in the same period of the previous fiscal year. This sharp increase has been a point of contention among foreign investors for a long time.
Sources indicate that the **International Monetary Fund (IMF)** has intervened in this matter, advocating for higher profit repatriation. Since Pakistan is currently under the IMF program and aims to maintain this crucial assistance, local authorities have agreed to the IMF’s recommendations on profit outflows.
Despite facing a low **foreign exchange reserve** of **$8 billion**, the **State Bank** remains optimistic about increasing the overall reserves to **$14 billion**, surpassing the initial target of **$13 billion**. This optimism is primarily driven by unexpectedly high **remittances**, and the **State Bank of Pakistan** has set a **$38 billion** remittance target by the end of FY 2025.
The statistics further reveal that during the first nine months of FY 2025, **foreign direct investment (FDI)** payments amounted to **$1.64 billion**, up from **$764 million** in the same period of FY 2024. Similarly, payments on foreign portfolio investments increased slightly, amounting to **$71 million** compared to **$62 million** last year.
A significant change in profit outflows was seen from **China**, with profits growing from **$79.07 million** in FY 2024 to **$201.10 million** this year. Although China has been Pakistan’s largest foreign investor for years, profit outflows from China have historically been modest.
The **United Kingdom** recorded the highest profit repatriation during the nine-month period, receiving over **$510 million**—a substantial rise compared to **$154 million** the previous year. The UK remains Pakistan’s oldest foreign investor.
The **United States** saw a nearly four-fold increase in profit outflows, which surged to **$190 million**, compared to just **$48 million** in the same period of the previous fiscal year.
Interestingly, the **United Arab Emirates (UAE)**, which was once Pakistan’s largest trading partner, has recently been overtaken by China due to a significant increase in exports from China to Pakistan. The UAE was the only major country to see a decrease in profit outflows, with **$146 million** being repatriated compared to **$178 million** in the previous year.
The increase in profit outflows highlights the growing concerns about foreign investor returns amidst a struggling economy, as Pakistan continues to navigate through financial challenges.
