Connect with us

Business

Pakistan’s remittances fall 9.5% to $2bn in February

Published

on

  • Workers’ remittances increase by 4.9% month-on-month.
  • Remittances for July-Feb FY2023 drop 10.8% to $17.99bn.
  • Highest remittance inflows sent by Pakistanis in Saudi Arabia. 

Remittances sent home by overseas workers dropped 9.5% to $2 billion in February 2023, year-on-year, as exchange rate fluctuations, economic uncertainties, and lack of trust in the system continued to encourage the use of illegal channels.

According to data released by the State Bank of Pakistan (SBP) on Friday, remittances stood at $2.2 billion in the same month of the previous year.

On the other hand, month-on-month, these inflows increased by 4.9% compared to $1.9 billion recorded in January 2023.

Remittances for the first eight months (July-February) of the fiscal year 2022-23 were recorded at $17.99 billion, showing a fall of 10.8% compared to $20.18 billion in the same period of FY2022.

A breakdown shows the highest amount of remittances during February 2023 was mainly sent home from Saudi Arabia ($454.6 million), followed by the United Arab Emirates ($324.0 million), the United Kingdom ($317.0 million) and the United States of America ($219.4 million).

The SBP-held foreign exchange reserves rose above the $4 billion mark after the cash-strapped nation received a $500 million loan from a Chinese bank.

The central bank, in its weekly bulletin, said that its foreign exchange reserves have increased by $487 million to $4,301 million as of the week ended March 3, which will provide an import cover of around a month.

The SBP received $500 million last week from the Industrial and Commercial Bank of China (ICBC) as part of the institution’s $1.3 billion facility, just days after it had received $700 million from the China Development Bank.

Remittances have been thinning out steadily and the trend is likely to press ahead of Ramazan, the holy month of fasting, and Eid-ul-Fitr — the most difficult times for inflation-ravaged citizens — when overseas workers remit large amounts to Pakistan to support their loved ones.

There has been an improvement in dollar supply, but the country needs more liquidity to cope with the demand for imports.

Moreover, closing the gap between the open market and the interbank market is imperative to discourage the wholesale use of unofficial channels. 

Given its bare minimum foreign exchange reserves, Pakistan direly required dollar inflows that have not been very steady. 

Finance Minister Ishaq Dar said on Thursday Pakistan was “very close” to signing a staff-level agreement with the International Monetary Fund (IMF), which would offer a critical lifeline for taming a balance of payment crisis.

An agreement would release $1.1 billion to the cash-strapped South Asian economy.

“We seem to be very close to signing the staff level agreement, hopefully, God willing, in the next few days,” Dar said at a seminar in Islamabad.

“I and my team are absolutely committed to complete this program to the best of our ability,” he said, adding: “We have been in the review and I think it has taken longer than it should have in my opinion.”

Islamabad has been hosting an IMF mission since early February to negotiate the terms of a deal, including the adoption of policy measures to manage its fiscal deficit ahead of the annual budget due around June.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.

Business

The International Monetary Fund (IMF) and Pakistan have initiated discussions at the policy level.

Published

on

By

The International Monetary Fund (IMF) and Pakistan will commence policy-level discussions today (Monday), as financially-strained Islamabad aims to secure another agreement with the Washington-based lender while satisfying all the stringent requirements associated with it.

The negotiations will primarily focus on deciding the magnitude of the upcoming IMF programme, establishing the corresponding terms and conditions, and defining the objectives and aims for the next budget.

Simultaneously, both parties will establish the macroeconomic objectives for the upcoming fiscal year’s budget. The IMF is determined to enforce policies such as monetary tightening (raising interest rates), increasing energy tariffs, adopting a market-based exchange rate, and implementing privatisation.

The expectation is that both parties will conclude the negotiations during the current week and finalise a staff-level agreement, which will then be subject to the ultimate approval of the IMF Executive Board.

A significant number of experts argue that the International Monetary Fund (IMF) has proposed a misguided policy of increasing interest rates, which has severely damaged the economy of the country. Consequently, it is imperative for the State Bank of Pakistan to promptly initiate a cycle of reducing interest rates.

They believe that the existing monetary policy will result in an overwhelming accumulation of debt and taxes, which will hinder the revival of economic activity and investment. This outcome has already been evident to all.

Despite the prevailing cost of living crisis in Pakistan, the IMF is insisting on raising the minimum energy bill, citing its necessity in managing the escalating circular debt.

However, due to the stringent conditions imposed by the IMF and Pakistan’s inability to address the issues in the energy sector, as well as the nature of agreements made with independent power producers (IPPs), the country is unable to benefit from the decline in global prices of solar panels and related equipment.

Further information: Should I choose solar power or not? The inefficiency of the energy sector provides a compelling reason to reconsider the solar energy policy.

Pakistan and the MF initiated discussions on both the Extended Fund Facility (EFF) and climate funding. Pakistan is seeking a larger and more extensive bailout package to stabilise and revitalise its economy.

According to sources, it has been stated that the two parties have reached an agreement on the significant objectives outlined for the forthcoming budget, which encompass the punctual settlement of foreign debt obligations.

Continue Reading

Business

Pakistan’s gold prices are still declining; see the most recent

Published

on

By

The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

Continue Reading

Business

Pakistan and the IMF begin talks for a new loan.

Published

on

By

Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

Continue Reading

Trending