KARACHI: Amid improvements in foreign exchange reserves, Pakistan has eased the outflow of profits and dividends, which surged by 112 per cent in the first five months of the current fiscal year (FY25).
The latest data released by the State Bank on Wednesday showed that the profits outflow during July-November FY25 amounted to $1.129 billion, compared to $532 million during the same period of the previous fiscal year.
The change comes with the improvement in the foreign exchange reserves of the State Bank, which have surpassed $12bn and are expected to reach $13bn by the end of FY25.
In FY24, the State Bank restricted the outflow of profits on foreign investments, drawing attention from the IMF. The Fund criticised this policy and insisted on ensuring the outflow of profits on foreign investments. The easing of restrictions began with the start of the current fiscal year.
Food sector accounted for the largest outflow of $247m
Financial experts said higher remittances, increased export proceeds and support from the IMF, World Bank and ADB enabled the State Bank to ease the outflow of profits.
The profits outflow in November this year was $321m, marking a 586 per cent increase compared to the same month last year. Experts predict that December may see a higher outflow of profits due to the end of CY24.
The highest outflow of $247m came from the food sector, up from $68m last year. This indicates that the food sector is performing well in Pakistan, despite the ongoing boycott campaign against several food products and chains.
The financial sector, which recorded record profits last year, sent out $160m during the first five months of FY25, significantly higher than the $58m sent out during the same period last year.
The power sector also saw a threefold increase in profits outflow this year compared to last year. Profits sent out from the power sector in the first five months totalled $156.6m, compared to $53m during the same period last year.
Other significant outflows included $95m from the tobacco and cigarette sector, $82m from the petroleum sector, and $70m from oil and gas exploration.
Published in Dawn, December 19th, 2024
