Key Takeaways
- Profits and dividends on foreign investment in Pakistan fell by 13.4% in the first two months of FY27.
- The outflow of profits and dividends from Pakistan fell to $557.6 million from $643.7 million in the same period last year.
- State Bank’s foreign exchange reserves reached $21.4 billion following an inflow of $3 billion from Eurobonds.
Profits and dividends on foreign investment in Pakistan have seen a significant decline, with the outflow falling by 13.4% during the first two months of the current fiscal year (FY27) compared to the same period last year, according to official data.
During July and August, the repatriation of profits and dividends from Pakistan fell to $557.6 million from $643.7 million in the same period of the previous fiscal year (FY26).
Despite the decline, financial experts noted that there is no immediate hindrance to the outflow of profits, as the State Bank’s foreign exchange reserves have reached a higher level, standing at $21.4 billion last week following an inflow of $3 billion from Eurobonds launched by Pakistan.
Attracting foreign investment has been a challenging task for the government, with the country facing setbacks due to the ongoing Gulf war. The second half of FY26 was particularly affected, with a 34% decline in foreign investment, recording FDI of $1.64 billion compared to $2.48 billion in the same period last year.
The decline in profit repatriation now reflects the impact of poor investment in the country, with the war in the Middle East continuing to worsen the situation. Regional forces like the Houthis have emerged to enter the war, making the negative impact of the Gulf conflict a significant challenge for the government in attracting foreign direct investment (FDI).
State Bank data indicates that the highest profit outflow was to China, which received $161.2 million during the first two months of FY27, down from $205.6 million last year. Outflows to the Netherlands increased to $107 million from $86.7 million, while those to the United Kingdom fell to $103 million from $147.5 million.
The biggest decline in profit outflow was recorded to the UAE, which fell to $19.2 million from $45 million last year, marking a more than 50% decrease.
