Capital outflows generated by foreign investors operating in Pakistan aggressively outpaced incoming foreign direct investment (FDI) during the 2025-2026 fiscal year, resulting in a severe $665 million deficit between repatriated profits and net new capital generation.
In a formal written briefing presented to the National Assembly on Friday, the minister in charge of the Special Investment Facilitation Council (SIFC) Division confirmed to lawmaker Dr. Mahreen Razzaq Bhutto that total corporate profit and dividend repatriation reached $2.305 billion during the fiscal year. This massive capital flight entirely eclipsed the country’s net FDI inflows, which stalled at $1.64 billion, indicating that investment-income payments dispatched abroad were nearly 41% higher than net incoming capital.
A structural breakdown of the liquidity drain revealed that the repatriation of earnings derived directly from legacy foreign investments accounted for the vast majority of outflows, standing at $2.202 billion. Concurrently, foreign portfolio investors remitted an additional $103.7 million in trading profits and dividends.
“Net FDI reflected new direct investment after accounting for relevant outward direct-investment transactions, whereas profit and dividend payments could arise from investments accumulated over several years.”
The manufacturing sector witnessed the most aggressive capital extraction, followed closely by commercial banking and energy infrastructure. Together, the top three sectors accounted for nearly $1.6 billion, representing approximately 69% of the total profit and dividend repatriation executed during the fiscal year.
| Industrial Sector | Repatriated Capital (FY26) |
| Manufacturing | $564.3 million |
| Financial and Insurance Activities | $537.4 million |
| Electricity, Gas, Steam, and Air-Conditioning | $496.5 million |
| Wholesale and Retail Trade | $211.6 million |
| Information and Communication | $166.9 million |
| Transportation and Storage | $162.1 million |
| Mining and Quarrying | $124.6 million |
Combined, these seven primary sectors generated massive outward payments accounting for more than $2.26 billion of the total $2.305 billion remitted by foreign entities. The SIFC Division noted that these sectoral figures encompass earnings repatriated against both direct and portfolio investments.
Despite the severe annual imbalance, government authorities maintained that the two macroeconomic indicators cannot be treated as directly comparable measures of sovereign investment performance. The SIFC Division argued that the sudden spike in outward payments was primarily catalyzed by improved foreign-exchange liquidity within the domestic banking sector, which systematically allowed previously delayed profit and dividend remittances to finally be cleared by the central bank.
Attempting to project continued foreign commercial activity, the government cited gross FDI inflows of $4.268 billion during FY2024-25 and $3.603 billion spanning the first 10 months of FY2025-26. However, these metrics represent gross investment inflows rather than net FDI, rendering them fundamentally distinct from the finalized full-year net investment figure of $1.64 billion.
To combat the widening capital deficit and attract fresh foreign equity, the state is heavily leveraging the “Pakistan Investment Policy 2023.” The overarching macroeconomic strategy relies on centralized investment facilitation through the SIFC, targeted operational support provided by the Board of Investment, and the accelerated industrial development of designated “Special Economic Zones.”