IN a positive development, remittances by Overseas Pakistanis surged to a seven month high, nearing $2.5 billion in October 2023 compared to the previous month’s figure of $2.20 billion. As per data released by the State Bank of Pakistan (SBP), the year-on-year growth reflected a 10% increase, rising from the same month of the previous year, which stood at $2.25 billion.
The increase augurs well for the under-pressure economy as in the first four months (Jul-Oct) of the current fiscal year (2023-24), total inflows slowed by 13% to $8.79 billion, down from $10.15 billion in the corresponding period last year. Experts believe the significant appreciation of the rupee during September and October 2023, backed by a robust governmental crackdown on foreign currency smuggling and hoarding, paved the way for increased inflows through official channels. They also point out that the substantial growth in remittance inflows would assist in maintaining the current account deficit within the range of $100-150 million in October. Some analysts are optimistic that healthy inflows may reverse the current account from a deficit to a surplus after three months of deficit in FY24. The strong increase in remittances makes them the most important source of foreign exchange after exports of manufactured goods. These remittances not only provide vital support to the national economy but also go a long way in improving the lot of families of the workers back home. There is, therefore, a need to devise a strong surveillance mechanism against illegal movement of the foreign exchange besides necessary incentives to motivate workers abroad to send money back home through normal banking channels. The remittances can also increase meaningfully if federal and provincial governments pay due attention to skill development, especially those which are in demand in the manpower importing countries like the Gulf region. The Kingdom of Saudi Arabia alone needs hundreds of thousands of skilled workers and engineers for its state-of-the-art NEOM city project and proper coordination with the KSA can help increase manpower export.
