Profit repatriation exceeds foreign investment inflows in first 11 months of FY26

KARACHI: Profit and dividend outflows from Pakistan outpaced foreign direct investment (FDI) inflows by 32 per cent during the first 11 months of fiscal year 2025-26, according to State Bank of Pakistan (SBP) data cited in a report published on Thursday.

The data showed that profit and dividend repatriation rose to $2.154 billion in 11MFY26, up from $2.105bn in the same period a year earlier. During the same period, the outflow was about half a billion dollars higher than FDI, underlining the gap between returns sent abroad by existing investors and the level of fresh foreign capital entering the country.

Pakistan has been trying to keep its current account in check while also seeking to bring in new foreign investment, but inflows have remained weak. The Board of Investment and the Special Investment Facilitation Council have been working to draw foreign investors, though those efforts have yet to produce the desired results.

Experts have also pointed to the absence of domestic investment, saying foreign investors are unlikely to view Pakistan as an attractive destination without stronger local investment activity.

Country-wise trend in inflows and outflows

Only a small number of countries made modest investments in Pakistan during the period, with China standing out as the largest contributor. China and Hong Kong together accounted for nearly half of total FDI.

On the repatriation side, the United Kingdom recorded the biggest profit outflow at $585.6 million in 11MFY26, compared with $605m in the corresponding period last year. China was the second-largest destination for profit outflows at $456.3m, almost double the $290m recorded a year earlier.

Other major outflows during the period included $190m to the Netherlands, $183m to the United States, $137.6m to the United Arab Emirates and $100.7m to Switzerland.

The government and the central bank appeared not to have placed restrictions on profit repatriation. After the IMF agreement, the government eased such outflows in FY25 and that conditions have improved since then, which should support investor confidence, particularly in light of what it described as comfortable foreign exchange reserves.

Foreign exchange reserves edge higher

Separately, SBP data showed that the central bank’s foreign exchange reserves increased by $6 million to $17.221bn in the week ending June 12. Total liquid foreign reserves held by the country stood at $22.741bn on that date, including $5.52bn held by commercial banks.