Pakistan has lifted a previously unannounced ban on foreign companies freely repatriating their profits to their headquarters abroad. This move comes as the country’s foreign exchange reserves improved, reducing the risk of default on foreign debt payments. In September 2023, multinational companies (MNCs) repatriated a record $163.7 million, a 447% increase compared to September 2022 and a 247% increase compared to August 2023. Over the past 18 months, profit repatriation remained low due to foreign exchange constraints. Foreign firms estimated that about $1.5 billion to $2 billion in accumulated profits and dividends remained undispersed during this period. This situation has improved thanks to a government crackdown on currency smuggling and encouraging the use of official remittance channels.
The International Monetary Fund’s $3 billion loan program, which concluded in June 2023, has also played a role in this recovery. Profit repatriation increased in various sectors, with the petroleum refining sector reporting the highest at nearly $54 million. The United Arab Emirates and Chinese companies were the top two profit senders. In addition to this, Pakistan is introducing stricter controls against money laundering and terrorism financing risks, requiring biometric verification for cash transactions at branchless banking agents’ locations from January 31, 2024.