KARACHI: Saudi Arabia remains the main source of Pakistan’s remittances despite global business shutdowns amid the coronavirus pandemic, central bank data showed on Monday.
Overseas Pakistani workers sent about $18.78 billion back home between July 2019 and April 2020, 5.5 percent more than in the previous fiscal year, with $4.4 billion remitted from Saudi Arabia alone, according to a statement issued by the State Bank of Pakistan (SBP).
Contrary to the expectations of most economists that money inflows would decline as many workers have been furloughed and repatriated amid the pandemic, $451.4 million was sent back home from Saudi Araba by Pakistani workers — 5.4 percent more than last year and only 0.2 percent less than in March 2020, SBP data showed.
Total remittances the country received in April amounted to $1.79 billion, 5.5 percent less than in the previous month.
The US emerged as Pakistan’s second largest remittance contributor after Saudi Arabia, with inflows of $401.9 million in April, followed by the United Arab Emirates with $353.8 million, and the United Kingdom with $226.6 million.
According to experts, there has been an increase in the use of official channels for money transfers in the wake of international flight suspensions and movement restrictions.
“As the airline industry is not operational, people who used to send money through personal contacts have resorted to the official channels,” Muzamil Aslam, senior financial expert, told Arab News.
But since layoffs are still expected to affect overseas Pakistanis, a government intervention may be required to further discourage unofficial transfers to sustain money inflows from abroad.
“Sustaining remittances with expected job losses abroad requires an unprecedented intervention to bring between $5 billion and $10 billion of hawala or hundi money through legal channels,” said Dr. Khaqan Hassan Najeeb, former adviser at the Ministry of Finance.
Hawala and hundi are informal ways of transferring money across borders.
Najeeb told Arab News that incentive programs such as lotteries could help put an end to illegal money transfers.
According to the Ministry of Finance, from July withholding tax exemption will be introduced for incoming remittances, while National Remittance Loyalty Program will be launched in September in collaboration with major commercial banks and government agencies to incentivize remitters.
Middle Eastern countries are major job markets for Pakistani workers. Since the beginning of this year alone, the region has provided employment to more than 171,500 Pakistanis — nearly 105,000 in Saudi Arabia alone, according to the Bureau of Emigration and Overseas Employment.
Concerns are rising, however, whether workers will still be able to seek overseas jobs, as labor markets, also in the Middle East, have been upended by the coronavirus outbreak.
“More than 100,000 visas were issued prior to COVID-19. Some 65,000 people were ready to fly, but now their future is uncertain,” said Ikram Qureshi of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
“Around 70,000 workers have already registered themselves for repatriation from the Middle east region,” he added.
Pakistan's remittances from Saudi Arabia remain high despite economy slowdown
https://arab.news/rbkjp
Pakistan's remittances from Saudi Arabia remain high despite economy slowdown
- Remittances from Saudi Arabia in April were 5.4 higher than last year
- Inflows through official channels are on the rise amid international movement restrictions
IMF board to approve Pakistan reviews today ‘if all goes well,’ say officials
- IMF’s executive board is scheduled to meet today to discuss the disbursement of $1.2 billion
- Economists say the money will boost Pakistan’s forex reserves, send positive signals to investors
KARACHI: The International Monetary Fund’s (IMF) executive board is scheduled to meet today, Monday, to approve the release of about $1.2 billion for Pakistan under the lender’s two loan facilities, said IMF officials who requested not to be named.
The IMF officials confirmed the executive board was going to decide on the Fund’s second review under the $7 billion Extended Fund Facility (EFF) and first review under the $1.4 billion Resilience and Sustainability Facility (RSF), a financing tool that provides long-term, low-cost loans to help countries address climate risks.
“The board meeting will be taking place as planned,” an IMF official told Arab News.
“The board is on today yes as per the calendar,” said another.
A well-placed official at Pakistan’s finance ministry also confirmed the board meeting was scheduled today to discuss the next tranche for Pakistan.
The IMF executive board’s meeting comes nearly two months after a staff-level agreement (SLA) was signed between the two sides in October.
Procedurally, the SLAs are subject to approval by the executive board, though it is largely viewed as a formality.
“If all goes well, the reviews should pass,” said the second IMF official.
On approval, Pakistan will have access to about $1 billion under the EFF and about $200 million under the RSF, the IMF said in a statement in October after the SLA.
The fresh transfer will bring total disbursements under the two arrangements to about $3.3 billion, it added.
Experts see smooth sailing for Pakistan in terms of the passing of the two reviews, saying the IMF disbursements will help the cash-strapped nation to strengthen its balance of payments position.
Samiullah Tariq, group head of research at Pakistan Kuwait Investment Company Limited, said the IMF board’s approval will show that Pakistan’s economy is on the right path.
“It obviously will help strengthen [the country’s] external sector, the balance of payments,” he told Arab News.
Until recently, Pakistan grappled with a macroeconomic crisis that drained its financial resources and triggered a balance of payments crisis.
Pakistan has reported financial gains since 2022, recording current account surpluses and taming inflation that touched unprecedented levels in mid-2023.
Economists also viewed the IMF’s bailout packages as crucial for cash-strapped Pakistan, which has relied heavily on financing from bilateral partners such as Saudi Arabia, China and the United Arab Emirates, as well as multilateral lenders.
Saudi Arabia, through the Saudi Fund for Development, last week extended the term of its $3 billion deposit for another year to help Pakistan boost its foreign exchange reserves, which stood at $14.5 billion as of November 28, according to State Bank of Pakistan statements.
“In our view this [IMF tranche] will be approved,” said Shankar Talreja, head of research at Karachi-based brokerage Topline Securities Limited.
“This will help strengthen reserves and will eventually help a rating upgrade going forward,” he said.
The IMF board’s nod, Talreja said, would also send a signal to the international and local investors regarding the continuation of the reform agenda by Pakistan’s government.
