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Islamabad, Dr. Shahid Rasheed Butt, former President of the Islamabad Chamber of Commerce and Industry (ICCI), expressed serious concerns over the continued decrease in remittances, a key source of foreign exchange earnings for Pakistan.
According to Islamabad Chamber of Commerce and Industry, Dr. Butt highlighted that remittances declined to 11,044.7 million dollars from July to November, a 10.3 percent drop compared to the same period last year. He pointed out that the decline in remittances is significant given the current economic situation and cannot be overlooked.
Dr. Butt noted that during the COVID-19 lockdown, remittances increased as overseas Pakistanis resorted to official channels for sending money due to the inaccessibility of the illegal hundi system. However, the situation has since changed, with many expatriates reverting to unofficial channels, reducing the volume of remittances received through banking channels.
He attributed the fall in remittances to a flawed policy of artificially controlling the rupee-dollar parity, which led to multiple exchange rates and indirectly supported the hundi system. Even after reversing this policy as part of the IMF’s stand-by arrangement conditions, remittances through official channels did not revive as expected.
Dr. Butt emphasized the need for the government to investigate the $4 billion decline in remittances in 2023 and to take confidence-building measures to restore the trust of overseas Pakistanis in the economy, which is at its lowest due to prolonged uncertainty.
On a positive note, Dr. Butt mentioned that the State Bank of Pakistan reported a current account surplus for the ongoing fiscal year. In November, the current account was in surplus by $9 million, compared to a deficit of $157 million in the same month last year. This surplus was primarily due to a significant reduction in imports, which fell by over $4 billion, positively impacting the current account.
Additionally, goods exports slightly increased by $596 million to $12.5 billion during the same period. Experts predict a total current account deficit of around $6 billion by the end of this fiscal year, while the SBP governor claims that the deficit will not exceed 1.5 percent of the GDP.
The post Decline in Remittances and Economic Challenges in Pakistan Highlighted by Former ICCI President appeared first on Pakistan Business News.