Remittances from Overseas Pakistanis - Updates

[ghazi52]

Remittances from Overseas Pakistanis - Updates

Remittances surge by 13% to $2.38b in Dec 2023​

Stability in rupee-dollar parity, crackdown on illegal networks boost numbers

Salman Siddiqui
January 11, 2024

design: Ibrahim Yahya

The inflows of workers’ remittances sent home by overseas Pakistanis increased by 13% to $2.38 billion in December 2023, as they dispatched the funds through official channels following the return of stability in the rupee-dollar parity and the crackdown against illegal currency networks.

The improvement in remittances fuelled the ongoing gradual rally in the rupee against the US dollar on Wednesday, strengthening the market view that the balance of the current account would record a surplus for the second consecutive month of December 2023.

The State Bank of Pakistan (SBP) reported that remittances rose by 13% compared to $2.10 billion in the same month of December of the previous year.

Inflows improved by 5.5% in the month compared to $2.26 billion in the prior month of November 2023.

However, workers’ remittances have cumulatively slowed down by 7% in the first half (Jul-Dec) of the current fiscal year 2023-24, amounting to $13.45 billion compared to $14.42 billion in the same period of the previous year, according to the central bank.

Topline Securities, CEO, Muhammad Sohail mentioned that the latest monthly inflows of $2.38 billion are higher than the full-year 2023 average of $2.20 billion a month.

Market talk suggests that the receipts have increased due to the crackdown against foreign currency smugglers, such as hawala-hundi operators and hoarders, since September 2023.

The cleanup operation crushed illicit currency markets, especially in the bordering areas with Afghanistan, and strengthened the hold of official operating networks like commercial banks and authorised exchange companies.

The crackdown not only helped arrest the then freefall in the domestic currency but also assisted it in bouncing back by over 9%, or around Rs26 in the past four months, closing at a 10-week high at Rs281.13 against the US dollar on Wednesday. Earlier, it had hit an all-time low at Rs307.10/$ in the first week of September 2023.

The inflows of workers’ remittances play a pivotal role in the economy, significantly helping finance the twin trade and current account deficits.

The total inflows in the first half of FY24 have, however, slipped by 7% due to high volatility in the currency between July-September 2023, in the wake of the then political and economic instability, according to market talks.

Speaking to The Express Tribune, Maaz Azam, Research Analyst at Optimus Capital Management, projected that the inflows would remain better in the second half of the ongoing fiscal year amid stability in the rupee-dollar exchange rate.

He estimated the average inflows at $2.4 billion a month during January-June 2024, including likely spikes above the average in the months around Ramadan and Eid festivals falling in the second half of FY24.

He foresaw FY24 full-year workers’ remittances inflows at $28.6 billion, slightly higher compared to the receipts at $27.3 billion recorded in FY23.

He noted that risk factors, which if occur, would disrupt the improved inflows, including the return of political and economic instability after the new political government is formed post the February 2024 general elections and a delay in the acquisition of another IMF programme after the current one of $3 billion completes in March 2024.

“The political instability and delays in the IMF new programme, if they take place, may allow illicit players to re-establish illegal currency markets and mount pressure on the rupee.”

On the flip side, a better-than-estimated increase in economic activities would prompt non-resident Pakistanis to send higher remittances, including for investment purposes. “The inflows would surge along with economic activities.”

He believed that overseas Pakistanis slowed down the dispatch of remittances for investment purposes amid the economic slowdown in the first half of FY24.

Region-wise inflows:

The central bank reported that remittance inflows during December 2023 were mainly sourced from Saudi Arabia at $578 million, increasing by 9% from $530 million received in the same month of the previous year.

Non-resident Pakistanis dispatched $419 million from the United Arab Emirates in the month, which was 27% higher compared to $331 million in the same month of the previous year.

Expatriates sent 15% higher remittances at $368 million from the United Kingdom compared to $321 million.

They dispatched 9% higher remittances at $264 million from the United States of America compared to $243 million.

Inflows from other GCC countries improved 6% to $255 million in the month compared to $240 million.

Pakistanis from European Union countries sent $285 million remittances, which were 19% higher compared to $240 million.

Workers’ remittances surged by 9% to $213 million from other countries around the world in December 2023 compared to $195 million in December 2022.

Remittances surge by 13% to $2.38b in Dec 2023 | The Express Tribune

Stability in rupee-dollar parity, crackdown on illegal networks boost numbers

tribune.com.pk

 

[ghazi52]

Remittance inflows​

Home remittances rose by 13.4 percent in December 2023 compared to the same month a year ago - to 2.4 billion dollars against 2.099 billion dollars. Three observations are in order.

First, the decline in remittances in December last year is exclusively attributable to the then Finance Minister Ishaq Dar’s extremely flawed policy to control the rupee-dollar parity without the foreign exchange reserves to intervene in the market that, in turn, led to multiple exchange rates with the differential between the hundi/hawala rate and the interbank rate as high as 40 to 45 rupees per dollar, fuelling the re-emergence of the illegal hawala mechanism.

It is relevant to note that this inane policy was implemented by Ishaq Dar during his third tenure as finance minister (2013-17), which led to the country experiencing the highest-ever current account deficit of 20 billion dollars in 2018 with, at the time, foreign exchange reserves propped up by massive borrowing, the cost of which the country continues to pay to this day.

Thus, to compare inflows in 2023 with 2022 data, especially after the agreement on the Stand-By Arrangement with the International Monetary Fund was reached on 29 June 2023 whose major component was a reversal of the control over the rupee-dollar parity may not quite be comparing apples and oranges but it certainly qualifies as comparing tangerines with oranges.

Secondly, what is highly disturbing is that inward inflows of remittances during the first six months of the current fiscal year are lower than the comparable period of the year before – 13.4 billion dollars this year against 2022’s 14.417 billion dollars - a decline of nearly 7 percent. It is relevant to note that Dar took oath on 27 September 2022 and hence the control of the rupee did not begin till October 2022 and therefore the recent rise in remittance inflows should not be a source of comfort for the stakeholders.

In addition, it is also concerning that the inflow rise is sourced to European countries rather than from the two existing major sources of remittance inflows - Saudi Arabia and the United Arab Emirates - countries which remained a primary source of remittances for Pakistan - though inflows from the two countries suffered a significant decline in the first six months of the current year, from Saudi Arabia remittance inflows declined by 8.9 percent and from the UAE by 10.9 percent. In the case of Saudi Arabia it is pertinent to mention that unlike the previous practice it has now started allowing some more categories of workers to live with their families in the kingdom. This is bound to adversely impact remittance flows back home.

And finally, focusing on a percentage rise rather than on total inflows appears to be an attempt to undermine the post-Covid-19 importance of remittance inflows as a percentage of the desired foreign exchange earnings particularly as they surpassed exports in fiscal year 2021.

In December 2021 remittance inflows were a high of 2520.4 million dollars against the 2381.5 million dollars in December 2023 – or a decline of nearly 6 percent. And this decline in spite of the decision announced by the Caretaker finance minister dated 15 September 2023 that an unbudgeted 80 billion rupees would be allocated to re-energize the flow of remittances through official channels.

Twenty billion rupees was released to the State Bank of Pakistan the next day, with no further reported disbursements on this account, however other than claiming an uptick in remittance inflows due to measures taken there is no update on how the taxpayers’ money was spent and whether the rise in inflows in December 2023 is seasonal or due to the disbursed 20 billion rupees or indeed due to meeting the IMF prior Stand-By Arrangement condition to ensure a market-determined exchange rate.

While one can understand the need to present data in a positive light for the economic team leaders, a fact that can be supported by focusing on percentages when the totals are low, yet there is a need to carefully balance this approach with the limitations it may place on the team leaders to take appropriate timely mitigating measures.

Remittance inflows

EDITORIAL: Home remittances rose by 13.4 percent in December 2023 compared to the same month a year ago - to 2.4...

www.brecorder.com

 

[ghazi52]

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Inflow of overseas workers’ remittances clocked in at $2.4 billion in January 2024, 1% higher on a month-on-month basis when compared to $2.38 billion in December 2023, showed data released by the State Bank of Pakistan (SBP) on Monday.

On a yearly basis, the monthly inflow of remittances registered an increase of 26% as it stood at $1.9 billion in the same month of the previous year, data showed.

Home remittances play a significant role in supporting the country’s external account, stimulating Pakistan’s economic activity as well as supplementing disposable incomes of remittance-dependent households.

However, despite the latest increase in January, workers’ remittances inflow of $15.83 billion was recorded during July-January FY24, reduced by 3% YoY or $386 million, as compared to $16.32 billion registered in 7MFY23.

Breakdown

Overseas Pakistanis in Saudi Arabia maintained their top spot, remitting the largest amount in January 2024 as they sent $587.3 million during the month. The amount improved by 2% on a monthly basis, and was over 43% higher than the $409.4 million sent by the expatriates in the same month of the previous year.

Inflows from the United Arab Emirates (UAE) saw a marginal decline of 3% on a monthly basis, from $419.2 million in December to $407.6 million in January. However, on a yearly basis, the remittances registered a massive increase of nearly 51%, as compared to $269.5 million reported in same month last year.

Remittances from the United Kingdom amounted to $362.1 million during the month, a drop of 2% compared to $368 million in December 2023.

Meanwhile, remittances from the European Union improved 20% year-on-year and 2% on a monthly basis as they amounted to $290.1 million in January 2024.

Overseas Pakistanis in the US sent $283.4 million in January 2024, a year-on-year increase of 32%, compared to $214.4 in same month previous year.

 

[RazPaK]

Nation is being held hostage. Do you think we’ll just let our loved ones die out? This is so pathetic.

 

[alphapak]

Overseas Pakistanis need to boycott remittance and also stop any
investment in Pak until the mandate of the people is respected by
the Duffers in GHQ.

 

[Hussain]

Overseas Pakistanis need to boycott remittance

In these terrible economic conditions we should abandon our families? DO you even know what "remittance" means?

and also stop any
investment in Pak until the mandate of the people is respected by
the Duffers in GHQ.

Even under PTI, law & order, the cornerstone for any serious investment, didn't improve, so that is another moot point.

 

[RazPaK]

In these terrible economic conditions we should abandon our families? DO you even know what "remittance" means?


Even under PTI, law & order, the cornerstone for any serious investment, didn't improve, so that is another moot point.

That is because all noon league lagaar baagars were sitting in their positions willing to switch allegiance for whoever pays them.

Don’t you understand the depravity of Pakistani awam? Most uneducated and deprived awam of Pakistan doesn’t give a **** about a popularity contest. They are worrying about the immediate well being of their families and themselves.

Political parties in Pakistan have reduced them to medieval serfs.

PTI is the only party that advocated for fair play to every citizen regardless of status or wealth. Imran Khan wanted all Pakistanis to have the same rights. The very ones he’s being denied now.

IK wanted Pakistanis to have the same rights Allah swt bestowed upon them, regardless of socio-economic status or religious beliefs.

Now we get people like you today that in order to lead a decent life has to step on somebody else. Is that the kind of life you want?

In order to feed your kids, you have to destroy someone else’s family? There is no place on Earth that does this. Muslim or kaafir.

 

[protest]

That is because all noon league lagaar baagars were sitting in their positions willing to switch allegiance for whoever pays them.

Don’t you understand the depravity of Pakistani awam? Most uneducated and deprived awam of Pakistan doesn’t give a **** about a popularity contest. They are worrying about the immediate well being of their families and themselves.

Political parties in Pakistan have reduced them to medieval serfs.

PTI is the only party that advocated for fair play to every citizen regardless of status or wealth. Imran Khan wanted all Pakistanis to have the same rights. The very ones he’s being denied now.

IK wanted Pakistanis to have the same rights Allah swt bestowed upon them, regardless of socio-economic status or religious beliefs.

Now we get people like you today that in order to lead a decent life has to step on somebody else. Is that the kind of life you want?

In order to feed your kids, you have to destroy someone else’s family? There is no place on Earth that does this. Muslim or kaafir.

Pakistan doesn't have a rich expatriate class. The majority of remittance of Pakistan comes from middleast where the labourers send out money to have their family sustain in Pakistan. They wouldn't have luxury to just abandon their families back home. No one can be so cruel, no matter Muslim or Kaafir.

 

[RazPaK]

Pakistan doesn't have a rich expatriate class. The majority of remittance of Pakistan comes from middleast where the labourers send out money to have their family sustain in Pakistan. They wouldn't have luxury to just abandon their families back home. No one can be so cruel, no matter Muslim or Kaafir.

Ok Indian. Anything else you need to teach me about Pakistanis?

 

[Hussain]

Pakistan doesn't have a rich expatriate class. The majority of remittance of Pakistan comes from middleast where the labourers send out money to have their family sustain in Pakistan. They wouldn't have luxury to just abandon their families back home. No one can be so cruel, no matter Muslim or Kaafir.

It is a trait of Cult followers, that they are incapable of grasping simple concepts. They would rather sink the whole ship than have someone else run it. Their over inflated egos wont allow it. Indulging in whataboutism is the only thing they are capable of.

Political workers, of any party, especially in the sub-continent, are a special breed. The ability to process data and churn out meaningful information, and then act upon it is non-existent. It is too much of an intellectual endeavor, being led like sheep is easier.

 

[Hussain]

Now we get people like you today that in order to lead a decent life has to step on somebody else. Is that the kind of life you want?

In order to feed your kids, you have to destroy someone else’s family? There is no place on Earth that does this. Muslim or kaafir.

You feeling alright? Who am I stepping on? Whose family am I destroying?

 

[RazPaK]

You feeling alright? Who am I stepping on? Whose family am I destroying?

Brother, the system in Pakistan is so corrupt that in order to get anything done, you have to basically screw somebody else over.

Do you think this is not true?

 

[Hussain]

Remittances amid higher emigration​

February 13, 2024

Remittances to Pakistan for January 2024 were seen rising by 26 percent year-on-year and by less than a percent versus December 2023 – as per the latest data shared by the central bank on its website. The rise in remittances in January and the previous few months on a year-on-year analysis has primarily been due to the crackdown taking place on illegal and informal channels that took up drastically due to the volatility of the exchange rate and the widening gap between the interbank and open market rates.


The country-wise breakup shows that the remittances inflow largely saw year-on-year growth in Saudi Arabia, UAE, and the EU with Saudi Arabia contributing to 24 percent of the total remittance in Jan-24 and year-on-year growth of 43 percent.


However, the overall situation continued to post a declining trend with 7MFY24 remittances falling by three percent year-on-year with flows from the USA UK, and EU countries showing positive year-on-year growth while all others posted negative growth (see table).


Despite the monthly increase in remittances over the past few months due to the crackdown on Hundi and Hawala, the decline in overall remittances has puzzled many. This is especially because there has been a significant rise in people leaving the country, which should technically mean a rise in the money sent back home despite the economic challenges abroad. This rise in emigration and not an equivalent increase in remittances is at times tied to the concept of the decline in conventional remittances and the rise of unconventional means like blockchain technology. How much of the remittances are actually diverted to the alternate technology will be explored later in this space.

Remittances amid higher emigration

Remittances to Pakistan for January 2024 were seen rising by 26 percent year-on-year and by less than a percent...

www.brecorder.com

 

[Hussain]

Brother, the system in Pakistan is so corrupt that in order to get anything done, you have to basically screw somebody else over.

Do you think this is not true?

Dear, The picture you are presenting is "slightly" exaggerated.

When you say " in order to get anything done, " it is a very broad term. Nonetheless, in most cases it us, the common middle class fella, who gets screwed over, be it transferring a property, registering your car, getting any utility meter, and so on....

The deep rot, is so deep, that only a selected few are above it.

Now coming to "remittances," I'm not clear as to what your definition is, but mine is what I, and those like me do, send money home so medical bills can be paid, kids can go to good school, and most importantly a roof over their heads.

So when people say, stop sending remittances, my question is, then who will look after my loved ones? I can't stop supporting my family because it hurts someones political agenda. It's as simple as that.

Now if you can provide a reasonable alternative, I'm all ears.

 

[ghazi52]

Clearly this is the case.