In FY24, Pakistan experienced a record surge in profit and dividend outflows by foreign investors, reaching $2.215 billion—nearly seven times the $331 million recorded in the previous fiscal year. This increase reflects the State Bank of Pakistan’s (SBP) efforts to address a backlog under pressure from the International Monetary Fund (IMF), China, and other stakeholders.
In FY23, the country faced severe foreign exchange reserve issues and was on the brink of default until the IMF intervened with a $3 billion Standby Arrangement. However, the SBP has gradually facilitated these outflows, settling approximately $2.2 billion in FY24. Notably, around $1.8 billion in profits from Chinese investors were delayed.
Data from the SBP revealed that the largest profit outflow was $638.6 million for financial businesses (banks and insurance) in FY24, a significant increase from $36.2 million in FY23. Middle Eastern investors, prominent in Pakistan’s banking sector, contributed heavily to this surge.
For the power sector, outflows were $245.8 million in FY24, up from $44 million in FY23. Telecommunications saw $202.8 million in outflows, compared to $13.2 million the previous year. Other sectors also saw increases: transport ($174 million vs. $6 million), food ($154 million vs. $0.7 million), and petroleum refining ($131 million vs. $0.5 million).
This easing of profit outflows has boosted foreign investor confidence, leading to a 17% increase in foreign direct investment to $1.9 billion in FY24.
Regarding debt repayments, the total external debt for FY25 is projected to be $26.2 billion, including $22 billion in principal and $4 billion in interest. Of this, $16 billion, including $4 billion in bilateral commercial loans, is anticipated to be rolled over, leaving a net repayable amount of $10 billion. So far, $1.1 billion has been repaid this month, with $9 billion remaining to be settled.
SBP’s foreign exchange reserves are expected to rise to $13 billion by the end of FY25, up from $9.1 billion. The SBP governor confirmed that all pending profit and dividend payments have been processed, provided documentation is complete. He also noted that Pakistan’s external debt position has improved, with most short-term debt, particularly $8 billion in commercial loans, replaced by long-term multilateral loans, addressing concerns about debt sustainability.
