SBP data shows remittances from Saudi Arabia increased by 56% to $761 million in July
\n KARACHI
\nRemittances sent home by overseas Pakistanis were recorded at $3 billion, up by 48% in July as compared to the same period last year, data released by State Bank of Pakistan (SBP) said Friday. According to source, the data, however, showed a 5% decrease in remittances on a month-on-month basis.
\nThe consistent $3 billion monthly remittances are attributed to a stable exchange rate, resulting from a reduction in the current account deficit, improved foreign inflows, a narrowing gap between open and interbank rates, and administrative actions such as cracking down on illegal dollar trade, foreign currency hoarding, and hawala\/hundi operators.
\n\u201cRemittances have maintained their upward trend post-Eid, signalling positive prospects for the economy and supporting currency stabilisation,\u201d said Awais Ashraf, the director research at AKD Securities Limited. \u201cThis increase is largely due to the movement of worker remittances into formal channels, spurred by the reduced rate difference between exchange companies and the interbank market,\u201d Ashraf added.
\nSBP data shows that remittances from Saudi Arabia \u2014 Pakistan\u2019s largest source of these funds \u2014 increased by 56% to $761 million in July. Remittances from Pakistani workers in the United Arab Emirates reached $611 million in July, marking a significant 94% surge, compared with last year.
\nFurthermore, remittances from the United Kingdom to Pakistan totalled $443 million in July, reflecting a 45% increase from a year earlier. The Pakistani diaspora in the United States also sent home $300 million in July, representing a 24 per cent rise from July 2023.
\nForeign remittances are a significant source of financing for Pakistan\u2019s external account, contributing to economic growth and raising the disposable incomes of households that rely on them for subsistence. \u201cThe higher remittance inflows have also improved the chances of a current account surplus in July, despite anticipating a slightly higher trade and services deficit from PBS [Pakistan Bureau of Statistics] figures and considering payments related to interest and profit repatriation,\u201d Ashraf said. The current account posted surpluses for three consecutive months but recorded deficits in May and June due to higher dividend and profit payments and a seasonal increase in imports. These factors outweighed a significant rise in exports and workers\u2019 remittances.
\nThe deficit widened by 33% to $329 million in June. Throughout FY24, Pakistan posted a current account deficit of $681 million, equivalent to 0.2% of the gross domestic product.
\nPakistan relies on remittances to maintain its foreign exchange reserves, which amounted to $9.15 billion as of August 2. The foreign loan repayment crisis is now over, according to SBP Governor Jameel Ahmad, who made this assurance in a statement before the National Assembly Standing Committee on Finance.
\nHe noted that despite Pakistan\u2019s foreign reserves doubling over the past year, they remain below the minimum threshold, equivalent to only 1.6 months\u2019 worth of imports.
\nIn FY25, Pakistan needs to repay $26.2 billion in external repayments, including $22 billion in principal and $4 billion in interest. It\u2019s anticipated that $16 billion will be rolled over. In July, $1.1 billion has already been repaid, and the remainder of the fiscal year will see $9 billion repaid.
\nFinance Minister Muhammad Aurangzeb said that Pakistan has secured assurances from China, Saudi Arabia, and the UAE to roll over debt for a year. This is positive news for the country as it awaits final approval for its new $7 billion loan programme with the International Monetary Fund.<\/p>\n","protected":false},"excerpt":{"rendered":"
SBP data shows remittances from Saudi Arabia increased by 56% to $761 million in July KARACHI Remittances sent home by overseas Pakistanis were recorded at $3 billion, up by 48% in July as compared to the same period last year, data released by State Bank of Pakistan (SBP) said Friday. According to source, the data, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-424107","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n