Foreign Investor Repatriation from Pakistan saw significant outflows. In December 2025 alone, foreign investors sent home profits and dividends totaling $88.8 million. Consequently, this brought the total capital outflows to an alarming $1.51 billion during the first half of Fiscal Year 2026 (FY26), as reported by the State Bank of Pakistan (SBP) and analyzed by Arif Habib Limited (AHL). This trend highlights the ongoing challenges and dynamics of foreign investment in Pakistan.
Although December’s repatriation saw a 3.6 percent increase year-on-year, it experienced a sharp 68.4 percent decrease month-on-month. This significant drop largely reflects the unusually high outflows recorded in November. Furthermore, these monthly fluctuations underscore the volatile nature of investment returns.
Despite this monthly slowdown, overall capital repatriation during July-December FY26 actually increased by approximately 23 percent compared to the previous year. This substantial rise clearly indicates stronger earnings outflows from foreign-owned businesses operating within Pakistan. Therefore, the long-term trend appears to be upward.
Understanding the Surge in Outflows
Data from the SBP confirms that foreign companies repatriated a total of $1.56 billion during the first half of FY26. This figure represents a significant increase of approximately $330 million from the $1.23 billion recorded in the same period last year. Primarily, this surge reflects improved profitability across key sectors. Additionally, smoother foreign exchange transfers compared to FY25 also contributed to this noticeable rise in outflows.
This increase in outflows was predominantly driven by returns from Foreign Direct Investment (FDI). FDI returns accounted for roughly 96 percent of the total repatriation during this period. In contrast, returns from Portfolio Investment (FPI) remained modest and, furthermore, were slightly lower than the previous year. This indicates a strong performance from long-term investments.
Looking at December’s monthly data, approximately $89 million was repatriated. Of this amount, $81 million originated from FDI returns, with the remaining $8 million coming from portfolio investments. Therefore, FDI continues to be the primary driver of these movements.
Sectoral Performance in Profit Repatriation
Analyzing the data from the State Bank of Pakistan (SBP), the financial sector experienced the most substantial increase in repatriated earnings. Significantly, robust growth was also observed within the power and communications sectors. This diverse growth suggests broad-based profitability among foreign-owned entities.
From July to December FY26, the financial sector alone recorded profits and dividend outflows amounting to $368.9 million. This figure marks a sharp increase compared to the $164 million reported during the same period last year. Consequently, this sector is a major contributor to the overall repatriation figures.
Following closely, the power sector ranked second in terms of repatriation, with outflows reaching nearly $359 million. This considerable sum reflects improved cash flows and strong returns generated from energy-related projects. Therefore, the energy sector demonstrates significant foreign investment activity.
Other sectors also contributed notably to these outflows, including food, pharmaceuticals, beverages, transport, and oil and gas exploration. However, trends varied considerably across these diverse sectors. Specifically, pharmaceuticals and food industries experienced strong year-on-year growth. In contrast, sectors like telecommunications, cement, and oil refining recorded significant declines in repatriated profits. This mixed performance highlights varying market conditions.
Economic Implications of Foreign Investor Repatriation
While rising repatriation generally reflects the improving profitability of foreign firms in Pakistan, it also exerts increased pressure on the nation’s external account. This challenge becomes particularly acute if export growth and new foreign inflows fail to keep pace with these outflows. Therefore, policymakers must carefully monitor these trends to ensure economic stability and sustainable growth.
