Faheem Saigol says govt measures begin yielding results
Islamabad
As the remittances to Pakistan have hit a record high in first six months of the current fiscal year the Pakistan Industrial and Traders Associations Front (PIAF) has said that foreign remittances flows are crucial which can support the country’s account balance amidst low volumes of foreign direct investment and constant growth of exports.
PIAF Chairman Faheemur Rehman Saigol, in a joint statement issued here today along with senior vice chairman Nasrullah Mughal and vice chairman Tahir Manzoor Chaudhry, observed that overseas Pakistanis sent 33 percent more remittances in the first six months of July and Dec the current fiscal year (FY25), compared to the same period of the previous fiscal year.
According to experts, workers’ remittances recorded a significant inflow of $3.1 billion during December 2024, marking a year-on-year growth of 29.3% and a month-on-month increase of 5.6%.
Cumulatively, remittances reached an impressive $17.8 billion during the first half of FY25 (H1FY25), reflecting a 32.8% rise compared to $13.4 billion received in H1FY24.
Faheemur Rehman Saigol said that it is expected that remittances to exceed $35 billion by the end of this year.
The primary sources of remittances in December 2024 were Saudi Arabia at $770.6 million, the United Arab Emirates (UAE) sending $631.5 million, the United Kingdom issuing $456.9 million, and the United States of America sending $284.3 million, according to SBP.
Tahir Manzoor Chaudhry attributed this remarkable surge in remittances to three key factors: narrowing the black market and interbank gap, stabilising the rupee against the dollar, and the robust performance of the Pakistan Stock Exchange.
Nasrullah Mughal said that the Special Investment Facilitation Council implemented administrative measures to minimize the difference between the black market and interbank exchange rates, encouraging formal remittance inflows, he said.
A stable rupee, with a 1% appreciation against the US dollar in 2024, and the SBP’s efforts to build foreign exchange reserves (now standing at $11.7 billion), reduced speculative activity. By curbing boom-bust cycles, this policy incentivized the diaspora to send remittances through formal channels.
The PIAF Chairman added that the PSX emerged as one of the top-performing markets, further boosting investor confidence.
He projected a consistent remittance run rate of $3 billion per month from January to June 2025, potentially driving total inflows to exceed $35 billion by the end of FY25?an increase of 35% compared to the previous fiscal year, which saw a 29% rise.
The PIAF leadership highlighted that enhanced control over leakages has significantly boosted remittances. Efforts to regulate the open and grey markets have been instrumental in improving formal remittance inflows.
Administrative measures implemented by the interim government and maintained by subsequent administrations have begun yielding results, particularly in curbing the smuggling of goods and currency by border mobs, which previously undermined remittances. Tightened immigration policies and improved documentation have further contributed to this positive trend, he said.
The government has effectively controlled the disparity in dollar-rupee parity across the open market, grey market, and interbank rates by enhancing documentation and cancelling licenses of non-compliant entities. For the first time, law enforcement agencies (LEAs) and bank officials were apprehended in operations against Hawala and Hundi networks.
They recalled the dire situation two years ago, when the grey market dollar rate was as high as Rs350, the open market at Rs335, and the interbank rate at Rs317. The discussions revolved around the possibility of the country’s default and the dollar reaching Rs500/$. Today, the rupee stands stable at around Rs278, a marked improvement.
However, they cautioned against policies that excessively favor exporters, referencing the State Bank governor’s statement that $9 billion was purchased last year to stabilize the dollar.
