Business

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

Published

2 years 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

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

13 hours ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

13 hours ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

3 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.