Arooj Zulfiqar

The State Bank of Pakistan (SBP) reported a 5.4% growth in workers' remittances for December 2023 as compared to the preceding month. According to the central bank, home remittances totalled $2.381 billion in December 2023, reflecting a notable increase from the $2.258 billion recorded in November 2023, marking a rise of $123 million. On a year-on-year basis, workers' remittance inflows increased by 13.4% in December 2023 compared to December 2022. Remittance inflows during Dec 23 were mainly sourced from Saudi Arabia worth $577.6 million, the United Arab Emirates $419.2 million, the United Kingdom $368 million and the United States $264 million, the SBP report noted. “The inflows recorded an impressive growth of 5.4% from November 2023, providing a substantial boost to the country's financial landscape,” commented Azfar Ahsan, former chairman Board of Investment (BOI). He said, “The crucial role played by overseas Pakistanis 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.”

“These funds serve as a vital source of foreign exchange reserves, contributing to the stability of the country's economic outlook. Additionally, the surge in remittances plays a pivotal role in supporting the Pakistani rupee and mitigating external trade imbalances.” According to Ahsan, the diversification of remittance sources is a noteworthy aspect. "The fact that remittances are coming from a range of countries, with Saudi Arabia, UAE, the UK, and the US leading the way, indicates a broad-based support system for our economy. This diversification is beneficial in reducing reliance on any single source, providing a more stable and sustainable inflow of funds," he explained. He 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.” The former BOI chairman commended the government's efforts to facilitate remittance inflows, and underscored the need for continued policy measures to sustain and enhance this trend.

"The government's policies, such as the Roshan Digital Account initiative and other incentives for overseas Pakistanis, have played a role in encouraging remittances through formal channels. Sustaining and building upon these efforts is crucial to ensuring a stable and robust economic environment,” he said. “Additionally, the government should strengthen the anti-money laundering (AML) mechanism. Robust AML regulations will help combat money laundering and illegal remittance channels. Implementing effective AML measures can enhance trust in formal remittance channels and protect the integrity of the financial system,” he said.

Credit: INP-WealthPk