Arooj Zulfiqar

The expatriates remitted $27 billion in the Fiscal Year 2023, down from $31.3 billion in the previous year, dealing a blow to the already crises-plagued economy, reports WealthPK. Remittances for June slumped to $2.2bn from $2.8bn a year earlier, the central bank data shows. These were mainly sourced from Saudi Arabia ($515.1m), the United Kingdom ($343m), the United Arab Emirates ($324.7m) and the United States ($272.3m). Talking to WealthPK, Azfar Ahsan, former chairman Board of Investment (BOI) said, “The decline in remittances poses a serious risk to Pakistan's economic stability and ability to meet the external obligations. The crucial role of the expatriates in sending money back home cannot be overstated, as these remittances have been rated higher than the country's cumulative exports, serving as a vital cushion for the struggling economy.

“However, unfortunately, recently, remittances have witnessed a marked decline. For decades, remittances have outshined the country's annual export earnings, providing critical support to the external account amid a decrease in foreign assistance.” “The main issue is their transfer through the informal channels rather than the formal and regulated framework. The hundi/Hawala network, which is quite strong, impedes the flow of funds to the government exchequer and creates a serious cash flow deficit within the country. However, despite current difficulties, the policymakers have set a target of $33 billion for the next financial year. Given the current economic and political turmoil, achieving this goal appears unrealistic,” he added.

Azfar said, “Attracting foreign remittances is crucial for Pakistan's economy, as it helps bolster foreign exchange reserves, reduces balance of payment deficits, and contributes to overall economic stability. “There is a need to introduce incentives for the expatriates to use the formal channels for remittances. This can include offering fee waivers, reduced transaction charges, or special financial incentives to encourage them to choose official channels over informal ones.” “Strengthening Anti-Money Laundering (AML) measures, ensuring robust AML regulations to combat money laundering and illegal remittance channels, and implementing effective AML measures can enhance trust in the formal remittance channels and protect the integrity of the financial system,” he said.

Credit: INP-WealthPk