Tag: remittances

PM Kakar highlights the positive aspect of Pakistanis going abroad for ‘better opportunities’

The issue of emigration from Pakistan has gained significant traction as more than 450,000 Pakistanis have departed the country in pursuit of improved job prospects overseas during the first half of 2023. Caretaker Prime Minister Anwaar ul Haq Kakar addressed this pressing concern, emphasising the dual nature of this trend as both a challenge and an opportunity for the nation.

Speaking to an audience at the University of Harvard’s interactive session in Islamabad, Prime Minister Kakar acknowledged the historic pattern of individuals leaving Pakistan in search of better livelihoods abroad. He highlighted the positive contributions that these expatriates make to the country through remittances, underscoring the integral role they play in supporting their families and contributing to Pakistan’s economy.

Amid discussions about Pakistan’s desire for a constructive long-term partnership with the United States, the premier also turned the spotlight on the phenomenon of emigration. He stressed that the exodus of individuals seeking better opportunities was a recurrent trend and not exclusive to the present time. Prime Minister Kakar further asserted that the pursuit of a better life beyond national borders was a valid aspiration, echoing the sentiment that the success of these individuals, whether at home or abroad, was of paramount importance.

Prime Minister Kakar’s address touched upon the challenges posed by high expenditures and limited resources in Pakistan. In this context, he emphasised that democracy served as a cornerstone of the nation’s strength and resilience. He commended the Pakistani populace for their ability to navigate crises with determination.

The premier’s discourse extended to the issue of unemployment, which he identified as a concern shared by individuals both within the country and those who have sought opportunities abroad. However, Prime Minister Kakar also shed light on the positive aspects of this migration trend.

“This is not only a challenge but also an opportunity, as these individuals bring benefits to the country through remittances,” Kakar said.

“It is not wrong for them to go to other countries in search of better opportunities,” he said, adding that when individuals return to Pakistan, they bring not only financial assets but also valuable professional skills, enriching the country’s human capital.

While the emigration trend remains a matter of significance, Prime Minister Kakar drew attention to the historical context. In the past, the country has witnessed varying levels of emigration, with the highest numbers recorded in 2015 and 2016. He underlined that this movement was a testament to individuals’ quest for better prospects and should be understood in that light.

August 26, 2023
Remittances to Pakistan decline by 19.3% to $2 billion in first month of fiscal year

Pakistan has experienced a notable decline in remittances during the first month of the current fiscal year, as data released by the central bank reveals a year-on-year drop of 19.3 per cent, amounting to $2 billion. This concerning trend was further accentuated by a month-on-month reduction of 7.3 per cent.

In the month of July, remittance inflows from Pakistanis residing abroad amounted to $2.2 billion. The distribution of these remittances showed that Saudi Arabia held the top spot with a contribution of $486.7 million, followed by the United Arab Emirates with $315.1 million. The United Kingdom and the United States of America followed closely with $305.7 million and $238.1 million, respectively.

Economic analysts anticipated this decline in remittances for the month of July, given the post-Eid ul Adha period. The reduction was expected, as Pakistani expatriates tend to increase their cash transfers back home during festive seasons. Interestingly, it seems that some of these remittance inflows have been diverted to the grey market due to more favourable exchange rates for dollars.

Samiullah Tariq, the head of research at Pak-Kuwait Investment Company, shed light on this shift: “In my view, as this was the month after Eid ul Adha, flows were relatively subdued. Some Pakistanis are opting for unofficial channels to transfer money.” The continuous devaluation of the Pakistani currency is also impacting investment sentiment among overseas Pakistanis, discouraging them from contributing more significantly to the economy.

The recent release of these remittance statistics coincides with the International Monetary Fund’s (IMF) approval of a $3 billion bailout package for Pakistan. The nation’s economy had been teetering on the edge of default due to mounting debt obligations. Governor Jameel Ahmad of the State Bank of Pakistan (SBP) reassured that the SBP remains committed to upholding its obligations, including maintaining a controlled difference between the interbank and open market exchange rates, as specified in the agreement with the IMF.

Fahad Rauf, the head of research at Ismail Iqbal Securities, voiced his concern over the decline in remittances: “The extent to which remittances have declined is indeed worrying. Unofficial channels offering higher rates have played a role in this scenario.” He also highlighted the SBP’s efforts to attract more remittances through proposed changes in incentive schemes, including a 50 per cent increase in the reimbursement rate for Saudi Riyal conversions.

The SBP’s latest monetary policy statement forecasts the current account deficit for fiscal year 2024 to range between 0.5 per cent and 1.5 per cent of the gross domestic product. This projection takes into account both evolving domestic and global economic conditions. The SBP remains optimistic about the prospects of multilateral and bilateral inflows following the IMF’s stand-by arrangement, which is expected to bolster external buffers and address short-term external financing requirements.

As the nation navigates through these challenges, the market-determined exchange rate will continue to play a pivotal role as the first line of defence against external shocks, further supporting the buildup of reserves. With a cautious eye on global commodity prices and a moderate domestic economic recovery, Pakistan aims to manage its imports and strengthen its economic stability.

August 11, 2023
Pakistan’s current account surplus soars to $334 million in June

The State Bank of Pakistan (SBP) has reported that Pakistan’s current account has achieved a surplus for the fourth consecutive month, reaching $334 million in June 2023.

This marks a significant improvement compared to the previous year when the current account recorded a deficit of $2.32 billion during the same period. The sustained monthly surplus trend began in March 2023.

Current Account recorded a surplus of $334 million in Jun 2023.https://t.co/Od8ikVvXrd #SBPBOP pic.twitter.com/llVGIKiKNa

— SBP (@StateBank_Pak) July 18, 2023

The primary factors contributing to this surplus, as highlighted by Arif Habib Limited (AHL), a reputable brokerage house, are a notable 55 per cent year-on-year decline in total imports and a 29 per cent year-on-year decrease in exports. Furthermore, remittances experienced a 22 per cent year-on-year decrease.

Data from the central bank reveals that Pakistan’s exports in June 2023 increased to $2.698 billion, in contrast to the total goods and services export value of $3.794 billion in June 2022.

Conversely, total imports amounted to $3.847 billion in June 2023, down from $8.533 billion in the corresponding period of the previous year.

July 19, 2023
Remittances in June 2023 decline by 21.4%, hitting $2.2 billion: SBP

In June 2023, remittances experienced a year-on-year decrease of 21.4 per cent, falling to the $2.2 billion mark compared to $2.8 billion in June 2022, according to data released by the State Bank of Pakistan (SBP).

Simultaneously, cumulative remittances sent by overseas Pakistanis for the 12-month period ending on June 30, 2023, diminished to $27 billion, reflecting a 14 per cent decline in the financial year 2022-23 when compared to the record-high inflows of $31 billion reported in the previous financial year.

In terms of monthly trends, remittances received by the country from overseas Pakistanis increased by 3.85 per cent from $2.102 billion in May to $2.18 billion in June 2023.

The primary sources of remittance inflows during June 2023 were Saudi Arabia ($515 million), the United Kingdom ($343 million), the United Arab Emirates ($325 million), and the United States ($272 million).

Moreover, proceeds from expatriates residing in European Union countries showed an 11 per cent month-on-month increase in June 2023, amounting to $272 million. Similarly, remittances from other GCC countries (Bahrain, Kuwait, Qatar, and Oman) totaled $271.9 million.

The decline in inflows reported for FY23 can be attributed to various austerity measures implemented by the coalition government and the banking regulator. These measures included high taxes on cash held in banks and exchange companies, aimed at increasing remittance collections.

Import restrictions, coupled with unfavorable domestic economic conditions during FY23, had a detrimental impact on remittance inflows. These factors resulted in reduced demand and led to a diversion of a significant portion of expatriate inflows towards informal currency exchange channels.

Fundamentally, the contraction in imports caused by policy measures, along with demand suppression, exchange rate depreciation, and the preference for undocumented channels to maximise profits, all contributed to curbing remittance inflows during FY23. As a consequence, the expatriate Pakistani community residing in various countries faced inadequate facilitation.

July 10, 2023
Pakistan lifts import restrictions to satisfy IMF demand

In a recent development, the State Bank of Pakistan (SBP) has taken the decision to lift all import restrictions as part of fulfilling a condition set by the International Monetary Fund (IMF).

The central bank issued a circular to officially end these restrictions, thereby satisfying another requirement put forth by the IMF.

To facilitate the release of over 6,000 containers, the federal government has granted permission to banks for remittance provision. The circular issued by the SBP states that remittances will be provided for all imports following the implementation of this latest order. The central bank has instructed authorised dealers to process remittances based on the recommendations of stakeholders.

It came to light yesterday that Pakistan and the IMF are facing challenges in reviving a loan program, leading to disagreements between the Ministry of Finance and the IMF. Sources revealed that the plan to bridge the external financing gap relied on funds received from a donor conference held in Geneva.

The primary objective of the conference was to garner support and contributions for Pakistan’s financial requirements. As part of this plan, the IMF was tasked with securing $500 million by June through the Geneva Donor Conference. However, efforts to obtain funds for the Ministry of Planning and Treasury have encountered obstacles. Delays in finalising contracts and agreements under the Donor Conference have further impeded the financing process.

Sources within the Ministry of Finance report that the amount received through the Geneva Donor Conference currently stands at $150 million, falling short of the expected sum. This has raised concerns from the IMF, which has expressed dissatisfaction with the level of financial support obtained through the conference.

According to ARY News, the funds acquired from the Donor Conference will be allocated to crucial recovery and rehabilitation projects in regions affected by floods. The aim is to address the needs of these communities and provide support for their restoration efforts.

June 24, 2023
Pakistan’s current account records $18 million surplus in April due to import reductions

Pakistan’s current account recorded a surplus for the second consecutive month in April, with analysts attributing this development to a reduction in imports resulting from administrative measures.

Data released by the State Bank of Pakistan (SBP) on Tuesday revealed that the country achieved a surplus of $18 million this month, compared to a current account deficit of $640 million last year. The current account had previously attained a surplus in March for the first time since November 2020, reaching $654 million, the highest since February 2015.

According to experts, April’s current account surplus was lower than expected due to the SBP’s clearance of an import backlog.

Overall, during the ten months of the current fiscal year, the current account deficit amounted to $3.25 billion, marking a 76 per cent decline compared to $13.65 billion for the same period last year.

According to the SBP data, the import of goods experienced a 38 per cent year-on-year decrease, amounting to $3.7 billion in April. In contrast, exports also fell by 33 per cent to $2.11 billion.

Furthermore, remittances declined by 29 per cent to $2.2 billion.

The current account has achieved a surplus for two months, primarily due to the containment of imports through administrative measures.

According to Geo, the decrease in imports has led to a slowdown in large-scale manufacturing in the country, impacting overall activity levels in sectors like services and trade.

May 17, 2023
Overseas Pakistanis send home remittances worth $2.5 billion, marking a seven-month high

According to data from the State Bank of Pakistan (SBP), remittances sent by overseas Pakistanis to their home country hit a seven-month high of $2.5 billion in March, which is attributed to Ramadan and Eid-ul-Fitr.

Compared to the prior month of February, the inflow of workers’ remittances increased by 27 per cent, but it was 11 per cent lower than March 2022. The legal channels for sending funds to family members were used more frequently, resulting in comparatively high inflows as the difference between the interbank and open market rates decreased.

Samiullah Tariq, the head of research at Pakistan-Kuwait Investment Company, described the increase as a positive sign. He explained that the kerb and interbank rates have minimal differences. Furthermore, the historical trend suggests that overseas Pakistanis send record-high remittances ahead of Eid festivals each year. The Ministry of Finance predicts that remittances will “further improve due to positive seasonal and Ramadan factors.”

The central bank reported that the cumulative inflow of $20.5 billion during the first nine months of the fiscal year 2022-23 led to a 10.8 per cent decrease in remittances compared to the same period last year. In addition, it is important to note that this month’s remittances have surpassed the trade deficit data of the Pakistan Bureau of Statistics (PBS), increasing the possibility of a current account surplus.

The Ministry of Finance also highlighted in its monthly outlook report that the current account deficit is expected to remain on the lower side due to the economic factors contributing to the figures. It should also be noted that the SBP trade deficit data point is usually even lower than the PBS trade deficit.

April 10, 2023
SBP governor says import restrictions will be eased after completion of IMF review

During a briefing to the Senate Standing Committee on Finance, State Bank of Pakistan (SBP) Governor Jameel Ahmed projected that the current account deficit for the ongoing fiscal year would be $7 billion, which is lower than the budgetary target of $10 billion. He attributed the lower deficit to measures taken to control imports, which he said could not continue for a longer period of time. Ahmed stated that import compression would ease after the completion of the International Monetary Fund (IMF) review.

Ahmed also mentioned that the low inflows due to the delay in the IMF review, higher commodity prices in the international market, and the Ukraine-Russia war are major reasons behind pressure on the external account and an increase in inflation. However, he clarified that an increase of 300 per cent basis points in the policy rate was not made on the demand of the International Monetary Fund (IMF), and that the Staff Level Agreement (SLA) is close to being finalized with the Fund.

Regarding the outflow of $2.4 billion on account of debt repayment in the first half of the current fiscal year compared to $6.3 billion inflow for the same period a year ago, Ahmed said that the decline in inflows was due to the pending review of the IMF program. He hoped that budgeted inflow would materialize after the completion of the review in the second half, thereby increasing foreign exchange reserves.

Ahmed also mentioned that the pressure of inflation will remain for two to three months and the average inflation this year will be 26.5 per cent. He added that remittances have decreased by $2 billion and are projected at $29 billion for the ongoing fiscal year against over $31 billion for the last fiscal year. There was also a decline of 7.4 per cent in exports as the country did not have exportable goods due to flood and a decrease in the export of rice. Vegetables and fruit exports have also declined by 48 and 37 per cent respectively.

According to The News, the committee expressed concern over the fluctuation of the dollar and said that it was the responsibility of the regulator to maintain the actual price of the dollar and take measures against black marketing and smuggling. The committee sought details of the amount of dollars smuggled to Afghanistan in the recent period. The committee members recommended seriously addressing the issue of the difference between the dollar rate in the open market and the inter-bank. The chairman of the committee recommended that instead of rupee trade with Afghanistan, either be replaced with the dollar or barter trade because trade with Afghanistan in rupee is also contributing to the external account pressure.

Senator Mohsin Aziz highlighted that the remittances, the FDI, and the exports have been on a decline, whereas the country’s debt was increasing. He also said that imports compression and policy rate were hurting the industry and exports, and exporters are unable to compete in the global market with regional players due to government policies.

In response to the issue of refusal of LCs to importers of pharmaceutical ingredients, the SBP said it was fully supporting the import of above articles and imports of pharma industry have considerably increased in the month of February and the first seven days of March 2023.

March 9, 2023
Pakistan receives $3 billion in remittances, highest in history

The State Bank of Pakistan (SBP) announced on Friday that remittances from Pakistani employees overseas have surpassed $3 billion for the first time, with Saudi Arabia and the United Arab Emirates contributing the most.

Saudi Arabia ($707 million), the United Arab Emirates ($614 million), the United Kingdom ($484 million), and the United States of America ($346 million) were the largest sources of remittances in April 2022.

“Remittances crossed the monthly mark of US $3 billion for the first time. Cumulatively, at $26.1 billion, remittances grew by 7.6 % in the ten months of FY22 compared to last year,” says a statement issued by the SBP.

Remittances crossed the monthly mark of US $3 billion for the first time. Cumulatively, at $26.1 billion, remittances grew by 7.6 % in the ten months of FY22 compared to last year.https://t.co/7XBd4uNES4 pic.twitter.com/8fDthGpYBi

— SBP (@StateBank_Pak) May 13, 2022

In terms of growth, remittances have been increased by 11.2 per cent on a month-on-month basis, and 11.9 per cent on a yearly basis

May 13, 2022
Budget explained: How it will affect you

Finance Minister Shaukat Tarin unveiled the budget 2021-22. The total expenditure of the budget had been kept at Rs 8,478 billion and had set the tax collection target at Rs 5,829 billion.

Leader of the Opposition in the National Assembly Shehbaz Sharif and Pakistan People’s Party (PPP) chief Bilawal Bhutto Zardari were in the house. Opposition members continued to bang desks and shouted slogans of “Go Niazi Go!” as the minister spoke.

Earlier, Bilawal met Sharif at his chamber in the assembly and they decided both parties would jointly oppose the PTI’s budget.

Tarin began his speech by saying it was an honour for him to present the Pakistan Tehreek-e-Insaf (PTI’s) third budget.

The minister paid tribute to the PTI government for stemming the spread of the coronavirus pandemic and taking steps to ensure businesses did not suffer massive losses in the country due to the lock downs.

Pension

Pensioners will get 10 per cent rise. Integrated allowance for Grade 1-5 has been raised from Rs 450 to Rs 900.

Defence budget

He said the defence budget of the country had been allocated Rs 1,370bn while the government had earmarked Rs 1,168 bn for development and non-development grants for provinces.

Subsidies

The government had allocated Rs 682bn for subsidies to various sectors of the economy, adding that Rs 479bn had been allocated to run the civil government.

Coronavirus

The government was serious in stemming the spread of the coronavirus and keeping its adverse effects at bay, adding that the government had set aside Rs100bn for it.

He announced the government’s initiative to earmark $1.1bn to procure coronavirus vaccines, adding that the government aimed to vaccinate 100mn people by July 2022.

Ehsaas Emergency Cash Program

“The government, through the Ehsaas Emergency Cash Programme, provided cash to 12mn people across the country,” he said. The finance minister announced that the government had set aside Rs260bn for the Ehsaas programme in the budget.

Remittances

Tarin said remittances had increased in Pakistan to record levels, adding that these are expected to rise to $29bn by the end of this month. “This is proof of the love that overseas Pakistanis harbour for Prime Minister Imran Khan,” he said.

Tax Collection

Speaking about tax collection, he said it had grown by 18% and had crossed Rs4,000bn, adding that critics had no response to the government’s impressive performance in this regard.

Growth Sector

Finance minister announced that the country’s economy was now entering the growth period, adding that almost every sector is growing.

He said Pakistan was seeing a “historic growth” in agriculture, stating that apart from cotton, all other crops saw extraordinary increases. He said that growth in the services sector helped improve numbers pertaining to poverty and had also played a major part in generation of wealth in Pakistan.

Tarin said the government had kept the growth target at 4.8% for the fiscal year, adding that the government will not leave the poor and the destitute at the mercy of inflation. “Never in our economic history, were poor people able to realise their dreams,” he said, adding that PM Imran Khan wanted to uplift the poor.

Interest-free loans

He said the government had decided to provide interest-free loans of up to Rs500,000 to the poor.

Development package

He announced that the Public Sector Development Programme will be increased from Rs630 billion to Rs900 billion to counter the adverse impact of the coronavirus pandemic.

Tarin announced a development package for 14 districts in Sindh, adding that these will focus on improving education, solving the province’s water issues, and carrying out development in these districts. Rs16.5 billion have been allocated for Karachi-based projects for the fiscal year 2021-22.

For developmental projects in Gilgit-Baltistan, the government has allocated Rs 40 billion. Meanwhile, Rs 54 billion have been allocated for Khyber-Pakhtunkhwa. Rs 601 billion will be given to South Balochistan for uplift programs, he added.

Sales Tax

The minister announced that the government has slashed sales tax on locally manufactured cars from 17% to 12.5%. The government has also exempted Federal Excise Duty (FED) on 850cc cars and will slash duty on electric cars.

Tarin said the government was slashing withholding taxes on mobile phones, adding that it will be reduced to 10% at first and then 8% later.

If mobile phone call duration exceeds three minutes, one rupee per call in addition to the rates of duty will be charged. For SMS service, ten paisa per SMS in addition to the rates of duty will be charged.

Tax on Internet services not approved by the Cabinet. FED reduced to 16 per cent from 17 per cent . IT and IT-enabled services given zero duty regime status. Data storage and Cloud computing included in the definition of IT enabled services.

Third-party audit

Tarin said the government was introducing third-party audits which would thwart the Federal Board of Revenue (FBR) harassing any individual or business entity. He said those who are found guilty of evading taxes or deliberately hiding their income will be fined severely.

Energy sector

In the budget for the next fiscal year, a special plan for the elimination of circular debt would be introduced. “The government plans to reduce line losses through investment,” Tarin added. Moreover, an electric vehicle policy would also be announced.

Development expenditures

In the next fiscal year, the government has increased the PSDP budget to Rs 900 billion from Rs 630 billion. Tarin assured that the government would improve road infrastructure. Furthermore, through PSDP, it will invest in high return projects.

Agriculture

Talking about agriculture, the minister said that the agriculture sector witnessed historic growth.

Unveiling the federal budget, the finance minister announced a national agriculture emergency program. The government plans to enhance livestock on modern lines and has decided to allocate Rs12 billion for the most important sector.

Dasu, Diamar-Bhasha and Mohmand dams are a part of the budget. Rs91 billion have been allocated for water resources. Moreover, Rs14 billion have been allotted for the Neelum Jhelum power project. Tarin mentioned that the ML-1 project will be completed in three packages.

Sharing the allocations for next year, he mentioned that Rs22 billion have been allocated to produce 100 MW electricity at Jamshoro. Moreover, Rs22 billion have been allocated for coal-based power projects, Rs16.5 billion for Tarbela fifth extension and Rs118 billion for different power transmission lines.

Climate change

The federal minister stated that Pakistan is one of the 10 countries most hit by climate change. Highlighting PM Imran’s vision of planting trees, he said Rs14 billion have been allocated for the government’s vision of “One Billion Tree Tsunami.”

Rs 118 billion have been allotted under PSDP for the social uplift. Non-tax revenues to rise by 22% during FY22, meanwhile federal expenditures to rise 15%.

Under the budget, $1.1 billion have been allocated for vaccine import.

June 11, 2021