Former President of the Islamabad Chamber of Commerce and Industry (ICCI), Dr. Shahid Rasheed Butt, expressed concern on Tuesday over the continued fall in remittances, which are an important source of foreign exchange earnings. He said that overseas Pakistanis are again using illegal channels to send money, reducing the volume of remittances received through banking channels.
Shahid Rasheed Butt said in a statement issued here today that from July to November, remittances declined to 11,044.7 million dollars, compared to 12,317.8 million dollars in the comparable period of last year. He added that this 10.3 percent decline is significant and cannot be overlooked due to the state of the economy.
The business leader said that remittances jumped during the COVID-19 lockdown, compelling remitters to use the official channels to send money to their families.
The illegal hundi system was scarcely available then; therefore, the country received a record amount during the lockdown, but the situation has changed.
Later, he informed that the remittances fell due to a flawed policy of artificially controlling the rupee-dollar parity that led to multiple exchange rates with a per-dollar difference of 35 and 40 rupees that supported the hundi system.
That policy was reversed as part of the prior condition of the stand-by arrangement with the IMF, but remittances through official channels were not revitalised as expected.
The government should investigate why remittances declined by $4 billion in 2023 and are still declining despite all administrative measures to curb the illegal business of currencies, including the smuggling of dollars.
He observed that confidence-building measures are required to attract more remittances, as the confidence of overseas Pakistanis in the economy is at its lowest level due to prolonged uncertainty.
He said that the current account surplus for the ongoing fiscal year has been reported by the SBP, which is encouraging.
Despite low inflows and higher outflows for debt servicing, the current account was in surplus by $9 million in November, compared to a deficit of $157 million in the same month last year.
The major impact was visible in the fall of imports, as goods imports fell by over $4 billion to $21.3 billion during the five months of the current fiscal year.
Exports of goods slightly increased by $596 million to $12.5 billion during the same period. This decline in imports had a positive impact on the current account surplus in November, he said.
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 cross 1.5 percent of the GDP.