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Pakistan Sees 11.5% Month-on-Month Growth in Workers’ Remittances

The State Bank of Pakistan (SBP) announced a significant increase in workers’ remittances in October 2023, with a month-on-month growth of 11.5%. The total remittances for the month amounted to $2.5 billion, marking a substantial rise from previous figures.

This increase is not just a one-time surge, but part of a consistent upward trend. The SBP reported that the total inward remittances for the first four months of the current fiscal year stood at a robust $8.8 billion. This figure represents a year-on-year growth of 9.6%, indicating a healthy and sustained increase in remittances.

A country-wise breakdown of the remittances reveals that the highest contribution came from Saudi Arabia, with Pakistani workers sending home $616.8 million. The United Arab Emirates followed closely with $473.9 million. Remittances from the United Kingdom and the United States were recorded at $330.2 million and $283.3 million respectively.

Dr Khaqan Najeeb, former economic adviser to the Ministry of Finance, attributed this increase to several key factors. The closing of the exchange rate gap between the open market and interbank has encouraged remittances to flow through the formal sector. This has resulted in an increase of nearly $300 million in October remittances compared to the previous month.

Dr Najeeb also highlighted the government’s recent enforcement measures against the illegal exchange market. These measures have curtailed the demand for dollarisation and smuggling, and have also helped control hundi/hawala, an informal method of transferring money without any actual movement of cash.

The increase in remittances from the Middle East, a region known for a higher percentage of hundi/hawala business, suggests a decline in these informal channels. This shift towards formal channels is contributing to the overall improvement in remittances.

The increase in workers’ remittances is a positive sign for Pakistan’s economy. It reflects the effectiveness of the government’s measures to curb illegal exchanges and promote formal channels for remittances. As these trends continue, the country can expect to see further growth in remittances in the coming months.

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