Business

Illegal channels: Pakistan’s remittances fall 19% to $2bn in Dec

Published

1 year ago

Farwa

Remittances decline 11% to $14.052 billion in first half of FY23.
Fall recorded mainly owing to mushrooming of grey transactions.
Inflows from Saudi Arabia fall 18% to $516.3 million in December.

KARACHI: Overseas workers’ remittances flowing into Pakistan dropped 19% in December to $2 billion from $2.52 billion recorded in the same month 2021, the central bank said on Friday, mainly owing to mushrooming of the grey transactions.

The remittances received during the July-December period of FY23 fell 11% to $14.052 billion from $15.807 billion in the first half of FY22, the State Bank of Pakistan (SBP) said.

Month-on-month, the inflows sent home by the Pakistani diaspora working abroad decreased by 3.2% to $ 2.108 billion in November 2022.

Arif Habib Limited (AHL), in a recent note, said a key risk that had emerged in the current account in recent months was the deteriorating trend in remittances.

The brokerage said that a sizeable gap (10-12%) between the official and unofficial exchange rates amid administrative measures undertaken by the SBP was the major reason for the declining official remittances trend, with rising flows via unofficial channels.

“We believe such a large gap between the two rates is unsustainable and counterproductive to the successful negotiations on the 9th review, which is a likely catalyst for things to normalize in the exchange markets.”

During Dec 2022, workers’ remittances recorded an inflow of US$2.0 billion. For detail see https://t.co/rPOvn9Dr8N https://t.co/7XBd4uOcHC pic.twitter.com/wxEZKq9zbk
— SBP (@StateBank_Pak) January 13, 2023

The AHL report added that this trend was also evident from the sharp decline in official remittances. “We estimate, the country losing around USD 150-200mn monthly flows due to the artificial gap in official and unofficial rates,” the brokerage said.

Remittances from Saudi Arabia, despite being the largest contributor, fell 18% to $516.3 million in December 2022 compared to $626.8 million sent in the same month of the previous year.

Inflows from the United Arab Emirates (UAE) declined 27% to $328.7 million from $453.2 million in December 2021, according to the central bank.

Pakistan’s central bank forex reserves have plunged to the lowest level since February 2014 after a decline of 22.11%, posing a serious challenge for the country in financing imports.

The announcement came at a time when the country is in dire need of foreign aid to reduce its current account deficit as well as ensure enough reserves to meet its debt obligations.

Coupled with another $5.8 billion held by commercial banks, the nation has $10.2 billion in reserves — which barely covers three weeks of imports.

Illegal channels: Pakistans remittances fall 19% to $2bn in Dec

During the week ended on January 6, the central bank’s forex reserves fell $1,233 million, or 22.12% to $4,343.2 million, a statement from the central bank said, down from last week’s reserves of $5,576.5 million.

Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, but devastating floods and a global energy crisis have worsened the situation.

Despite recent compression measures by the government, Pakistan’s import bill for goods was $5.1 billion per month in both November and December, according to the country’s statistics bureau. Its main imports are critical energy-related fuels.

Business

Donald Lu visits Finance Minister Aurangzeb at the World Bank headquarters.

Published

12 hours ago

Farwa

Wednesday saw Minister for Finance and Revenue Muhammad Aurangzeb meet US Assistant Secretary of State for South and Central Asian Affairs Donald Lu and Principal Deputy Assistant Secretary Elizabeth Horst.

The finance minister briefed US officials on Pakistan’s reform plan at the World Bank. Meeting both delegations decided to improve bilateral ties.

Meeting topics included alternative energy, agriculture, climate, and tech industry. Boosting the Pakistan-US economic partnership was another finance ministry priority.

With US officials, Pakistan’s Finance Minister Muhammad Aurangzeb addressed IT, agriculture, and other business potential.

Pakistan would collaborate with the US International Development Finance Corporation and Exim Bank, according to Muhammad Aurangzeb.

His name is Donald Lu.
Over 30 years of US government service for Lu as a foreign service officer.

What Pakistan calls the “cipher” dispute involves the American official. The Pakistan Tehreek-e-Insaf (PTI) founder claimed that a supposed official letter between Washington and Islamabad proved his ousting as PM was a US conspiracy.

Washington has strongly refuted Khan’s allegations.

The State Department’s top South and Central Asia diplomat is Donald Lu, assistant secretary of state.

Business

Huge investment potential exists in the telecom and IT sectors. Shaza Fatima

Published

1 day ago

Farwa

According to Shaza Fatima Khawaja, Minister of State for IT and Telecommunication, there are numerous investment prospects in Pakistan’s IT and telecom sectors.

She noted that the current administration is dedicated to fostering foreign investment in the nation, in line with the Prime Minister’s goal.

According to a news release, CEOs Wateen Adil Rashid and Muhammad Shahbaz Khan of Taavun (Pvt) Limited, who paid her a visit on Tuesday, spoke with Minister of State for IT and Telecommunication Shaza Fatima Khawaja.

She declared that the private sector would receive complete support because it is essential to growing our exports.

Regarding youngsters, she stated that they are our greatest asset and that efforts are being made to further their growth.

Sheikh Nahyan bin Mubarak Al Nahyan of the United Arab Emirates was thanked by Shaza Fatima for his particular interest in promoting additional investment in Pakistan’s telecom industry.

Business

WB pledges complete support for changes aimed at stabilizing Pakistan’s economy.

Published

2 days ago

Farwa

Federal Minister for Finance and Revenue, Muhammad Aurangzeb, met with President of the World Bank Group, Ajay Banga, according to a press release from the ministry of finance here. During the meeting, the minister discussed Pakistan’s progress under the nine-month Standby Arrangement (SBA) program as well as ongoing reforms in priority areas of taxation, energy, and privatization.

According to the statement, the minister also extended an invitation to the president to visit Pakistan, and both parties acknowledged the necessity of a rolling 10-year country framework plan.

The minister also talked on safeguarding Pakistan’s eligibility for concessional funding and future project pipeline during a meeting with Masatsugu Asakawa, President of the Asian Development Bank (ADB).

The chief executive officer of the US International Development Finance Corporation (DFC), Scott Nathan, also met with the minister of finance.

They discussed during the conference how DFC may increase its investments in Pakistan after resolving unresolved conflicts in a cooperative manner.

According to the minister, the government is supporting creative financing strategies to maximize PPP potential and private sector participation.

According to the statement, he gave his word that the government will do everything in its power to assist investment projects by both foreign and local businesses in Pakistan.