FDI repatriation
There is no doubt that in spite of achieving in 2025 the highest current account surplus ever in the country's history, Pakistan is grappling with serious foreign exchange reserve crisis, and hence the country's capacity to clear all dues/receivables on foreign direct investment remains a challenge.
Foreign exchange reserves held by the SBP have risen to 14525.6 million dollars on 1 July 2025 against 9423.7 million dollars on 12 July 2024, a significant rise; however, given that as per the Governor SBP total rollovers from the three friendly countries (China, Saudi Arabia and the United Arab Emirates) are 16 billion dollars (minus borrowing from the multilaterals and other bilaterals) the rise does not provide a comfort level.
In this context, it is relevant to note that Chinese Chief Executive Officers of various Independent Power Producers — coal-fired, and wind power — established under the umbrella of China Pakistan Economic Corridor, have repeatedly written to authorities requesting payment of outstanding receivables of 500 billion rupees (1.72 billion dollars).
The CEO of Pakistan Matiari-Lahore Transmission Company (Pvt) Ltd, Xiong Feng wrote to the Managing Director of National Grid Company (formerly NTDC) recently noting that 'NGC is still in the process of settling the invoice for December 2024 which became overdue on 31 January 2024. In addition, invoices for January, February, March, April, and May remain outstanding and unpaid.
As a result, the total amount payable to PMLTC under the Transmission Services Agreement has ballooned to 55.071 billion rupees (exclusive of sales tax) with 47.076 billion rupees now long overdue including interest on delayed payments.' It has been reported that the government recently released 5 billion dollars to the Chinese IPPs through an escrow account and intends to disburse an additional amount to the Chinese IPPs prior to the expected visit of Prime Minister Shehbaz Sharif to China next month.
Portfolio investment as per the Finance Division's June Update and Outlook indicated that it declined in July-May to negative 624.4 million dollars as opposed to negative 559.5 million dollars in the comparable period the year before while FDI declined to 1354.4 million dollars in 2025 against 1582.9 million dollars in the same period of 2024. This is in spite of the government's comprehensively proactive approach to lure and facilitate all incoming FDI — an approach whose success is constrained due to the country's sustained non-investment rating by the three international rating agencies.
This indicates that the economy remains fragile in spite of some improvements; notably, in the decline in inflation and the current account surplus. However, this fragility must not be a source of disheartenment but must be perceived as a challenge to continue on the path towards structural reforms particularly in the tax and power sectors as well as a proactive attempt to curtail current expenditure on items other than those associated with a projected reduction in the mark-up.
To conclude, Pakistan is poised to take advantage of its geographical and ideological positioning in the emerging multipolar world and one would hope that the economic team leaders take timely appropriate reforms to strengthen the momentum towards achieving inclusive development.
Copyright Business Recorder, 2025
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