Remittances From Overseas Pakistanis Up 29 % in September 2024 Year-on-Year
As per the data collected by the State Bank of Pakistan (SBP), in September 2024 remittances from overseas Pakistanis were recorded USD 2.849 billion, indicating an upsurge of 29pc year on year. Also, it was an incrasing from inflows of USD 2.208 billion recorded in August.
ARY News reported that the remittances mostly came from Saudi Arabia which stood at US 681.3 million, United Arab Emirates at US 560.3 million, Britain at US 423.6 million, and United States of America at US 274.9 million.
Sources suggest that the remittances were primarily transfers from families working in Middle Eastern nations who are a sizable portion of the population of Pakistan and who have supported their countries economies’ expansion alongside Western countries using their foreign exchange. Additionally, the remittances received were prime focus for the wholsale and the exchange companies as the reserves increased. These measures will help sustain the flow of remittances and ensure their positive impact on the national economy.
Remittances are critical in terms of foreign and income sources for the overseas Pakistani community while at the same time creating activities in the country`s economy. They are particularly important in softening up the economy against crises and cyclical downturns at the same time boosting its consumption and investment at the household level. In fact, remittances contribute about a tenth of the country’s GDP and include a big share of the foreign reserves exchnage.
Nevertheless, remittances have been unstable. The recent decrease in Pakistan’s remittance economy due to global financial crisis is expected to lower their growth. In spite of this, analysts do expect the trend of strong inward remittances to continue. Furthermore, steps are being taken by the government and the central bank to control the future of these factors. Also, they have begun to encourage the use of official banking channels and have put a register on the illegal hawala-hundi outlets. As a result, the majority of remittances are now coursing through the banks and exchange companies. This shift will help in the stabilizing the rupee and the reduction of current account deficits.
Yearly
Remittances from overseas Pakistanis to Pakistan’s home country went up in August 2024 sending money back home increased by 7% month on month. During the month, expatriate Pakistanis in the United Kingdom sent remittances worth $474 million, increasing from $375.8 million in July. Another increase that was recorded was from the European Union, which according to estimates gained 7.1% MoM, reaching a total of $222.4 million.
Remittance flows have gone up but are prone to volatility due to dependence on global economic conditions. This type of income has the upside of helping to offset current account deficits and fostering growth while allowing households to maintain their income levels. Despite this positive outcome, remittances can be affected by factors such as war as seen during the COVID-19 global pandemic.
In efforts to stop illegal methods of remittance that have been used by many such as Hundi, chunks have transferred through hawalas that are otherwise illegal, the government with the introduction of a different policies has nudged remittance flows to increase through the proper channels. Although, extensive and time consuming, remitters need to find the counterparts and agent transfers offering them lower costs and with conversion along with service fees.
While the exchange rate is stable, on the broader remittance market the SBP projects remittances to grow in the following months adding to the growing trends in the months up until now. Such actions would also contribute to the improvement of the country’s inflation challenges that are distressing the economy due to the current level of the account imbalance. With improved employment rates in the countries that the country exports labor services to, this will bring additional inflows that will stimulate growth, confirms SBP.
Quarterly
Pakistan has an investment relationship with the United States of America that has been stable and expanding with various types of operations such as franchising, consumables, agribusiness, and other quite profitable activities. The US business council in Karachi has more than 60 member companies and a considerable number of Fortune 500 companies. Pakistan’s banking and financial institutions have reached a great level of complexity, most countries would have at least a SBP which has been the case since the country has developed over time, not only does it have a clear bank it has the SBP and the SECP which serve as regulators and provide meaningful structure and oversight. The percentage of registered financial accounts among men over the age of 18, women over the age of 18 and both genders is quite positive with over 30% of men and over 13% of women registered.
In August of 2024, Remittances for commence and consumption stood at $2.943 billion, that’s a 44% year on year growth with a slight decline of 2% month on month as pointed out by SBP. Among overseas Pakistanis, those in Saudi Arabia sent the most remittance amounting to $713.1 million in remittances to Pakistan. Remittances second place went to the UAE, then went Great Britain, last place went to the US. Banks and Exchange Companies (ECs) were required to put into remittance flows following the fact that the SBP revamped the incentive structure. In the meanwhile, remittances ECs will receive Rs20 on the surrender of every USD eligible home remittance, while banks will receive Rs2.
Overseas Pakistanis’ efforts to invest in technology zones have also been strengthened with the opening of 26 Community Welfare Attachés in Gulf Countries and Europe. The members of these offices will search for fresh opportunities and workplaces for Pakistanis living in overseas. However, foreign investors have been complaining that doing business in Pakistan has its difficulties including everchanging laws and poor protection of intellectual property rights. On top of this, the weather is quite unpredictable which makes the food processing as well as the textile sectors even more complicated.
Annual
Further inflows are expected to complement the rupee and provide greater imports into the economy of Pakistan. They also assist in enhancement of foreign exchange reserve as well as reduction of current account deficits. The remittance growth according to the finance experts owes its benefits to the continuous development in the economy of the middle east, limited difference in the rates between the open and interbank markets, and the trend of people working abroad increases.
As SBP used to do earlier also, they have changed the structure of incentives for banks and exchange companies for boosting homeward remittances once again. For instance, a dollar purchased by ECs from the black market will fetch the counsels two rupees as subsidy when they later remit the dollar to the SBP, while all transactions relating to home remittances will be compensated to the banks. It will also put in place 26 Community Welfare Attaches in the Middle East and Europe that will work in seeking employment, businesses and various markets for Pakistani expatriates.
Investors say that Pakistan’s business environment is quite difficult. They always mention burdensome and inconsistent rules, lack of enforcement of intellectual property rights and policies on taxation that change frequently as hindrances to investment. Security issues arising out of domestic and external conflicts also affect the investors’ trust in the safety and return of their investments.
Notwithstanding these difficulties, the country still is one of the top countries in terms of FDI. Almost year on year, foreign investments have been making an impact on the increase of Paksitan’s gross domestic product (GDP). The government provides unique incentives for export oriented units, which are independent industrial units that export all the products manufactured by them. They are given exemptions from duty and taxes on machinery, raw materials as well as vehicles.
