KARACHI: In the first month of the new fiscal year, profits and dividends on foreign investments in Pakistan dropped precipitously to a negligible level, indicating the weak economic performance.
According to the most recent data from the State Bank of Pakistan, foreign investments, predominantly foreign direct investment (FDI), generated earnings and dividends in July that totaled just $16.5 million as opposed to $159.2 million in the same month previous year.
The July outflow was significantly lower than the $50.6 million in June, showing a slowdown in economic growth, and FDI inflow has also decreased.FDI decreased by 43.3 percent to $58.9 million in July from $103.8 million in the same month last year.
Investors should be very disappointed because the country is being severely affected by flash floods while the stream of funds from creditors is still a pipe dream.
Despite a rough patch of political unrest in the final quarter, the economy did well during FY22.
Even more funds were brought back home than FDI was in FY22. The SBP data revealed that FDI inflows were $1.47 billion while outflows was $1.651 billion, demonstrating a strong performance of the enterprises with foreign investments.The rising risks connected with Pakistan’s diminishing payment capacity made foreign investors wary of investing there, but the IMF’s stringent requirements for restarting the loan program continued to be a fresh barrier and kept them on their toes.
The IMF’s requirements will eventually cause the economic growth to decrease from 6% to 3%.
According to the data, mining and quarrying had the greatest outflow, $7.9 million in July compared to $0 during the same period last year.
A total of $62.5 million in profits were lost in July 2021, of which $46.6 million came from telecommunications. The outflow is zero this year.
