SURGE IN REMITTANCES REFLECT OVERSEAS PAKISTANIS’ ECONOMICCONFIDENCE

Aiman Khattak

In a notable stride towards bolstering Pakistan’s economy, the month of
December 2023 witnessed a remarkable surge in worker’s remittances from
overseas Pakistanis, as funds were channeled through official channels after stability
returned to the rupee-dollar exchange rate and a crackdown on illegal currency networks.
Marking a significant upturn, the influx of workers’ remittances escalated by 13
percent to a staggering $2.38 billion, surging ahead from the $2.10 billion recorded
in December 2022. This impressive growth can be attributed to the burgeoning
confidence of overseas Pakistanis in the stability and forward momentum of the
Pakistan’s economy.
One of the key factors contributing to the increase in remittances is the return of
stability in the rupee-dollar parity. The efforts of the State Bank of Pakistan (SBP) in
maintaining a stable exchange rate have instilled confidence among overseas Pakistanis,
encouraging them to send their hard-earned money through official channels.
Additionally, the decisive actions taken by COAS General Asim Munir in
cracking down on illicit currency networks of smuggling and hoarding have further
fortified the faith of overseas Pakistanis in the integrity and transparency of the
formal banking system, thereby ensuring secure and accountable remittance
transactions. The enforcement operation effectively dismantled illicit foreign exchange
markets, particularly in the border regions of Afghanistan, while concurrently reinforcing
the integrity and efficiency of official operating networks like commercial banks and
authorized exchange companies.
Moreover, the stringent measures implemented not only put a stop to the sharp
depreciation of the domestic currency but also facilitated its subsequent recovery,
witnessing a notable increase of over 9 percent or approximately Rs 26 in the past
four months. This positive trajectory culminated in the currency reaching a 10-week
peak of Rs 281.22 against the US dollar this week.
To note that the significance of remittances in driving a nation’s economy cannot
be overstated, and the December 2023 data exemplifies the diverse origins of these vital
funds. Particularly noteworthy is Saudi Arabia’s prominent position as the top
contributor, with remittances reaching a substantial $577.6 million. The United
Arab Emirates followed closely, making a noteworthy contribution of $419.2
million, while the United Kingdom demonstrates its economic support with
remittances amounting to $368.0 million.
Furthermore, the contribution of overseas Pakistanis residing in the United States
deserves notable recognition as they have played a substantial part by sending
remittances amounting to a significant $263.9 million. This diverse range of sources
underscores the widespread trust and unwavering confidence that overseas Pakistanis
have placed in the economic prospects of their homeland.
The anticipated repercussions of the surge in remittances include a favorable
effect on the Pakistani rupee, fortifying its standing in relation to the US dollar. The
gradual appreciation of the rupee is poised to augment market stability and foster investor
confidence, consequently attracting foreign direct investment and catalyzing economic
growth. Additionally, the sustained surplus in the current account for the second
consecutive month of December 2023 serves as a reinforcing factor, affirming the
positive trajectory of Pakistan’s economic indicators.
The notable increase in remittances serves as a reflection of the growing
confidence overseas Pakistanis have in the nation’s economy. This confidence is
rooted in the potent efforts undertaken by the Special Investment Facilitation
Council (SIFC), a civil-military hybrid forum launched in June 2023. The SIFC, under
the leadership of COAS General Asim Munir, has been instrumental in expediting
decision-making processes and fostering foreign investment to drive Pakistan’s
economic upliftment. The resultant stability achieved over the past six months has
established a conducive environment for economic expansion, empowering overseas
Pakistanis to invest in their homeland and provide support to their families.
Additionally, the eminent upsurge in remittances carries significant implications for
the future of Pakistan, encompassing diverse sectors and presenting considerable
advantages. Primarily, the increased inflow of remittances will serve as a crucial
foreign exchange source, bolstering the nation’s reserves and fortifying its external
standing. This will enhance economic stability and contribute to the reduction of external
vulnerabilities. Furthermore, the surge in remittances has the potential to stimulate
investment in critical domains such as infrastructure development, manufacturing, and
entrepreneurship. These funds can be directed towards projects that enhance
connectivity, and boost productivity, thereby fostering sustainable economic growth.
Overall, the remarkable increase in remittances highlights the growing confidence
of overseas Pakistanis in Pakistan’s economy. The stable rupee-dollar parity, coupled
with the crackdown against illegal currency networks, has encouraged the use of official
channels for remittance transfers. This positive development is expected to fuel the
ongoing rally of the Pakistani rupee and strengthen the overall market. It underscores the
faith placed by overseas Pakistanis in the country’s economic stability, which is being
achieved through the dedicated efforts of the military leadership, including the COAS, and
the initiatives of the SIFC. This surge in remittances serves as a testament to the
unwavering support and belief of overseas Pakistanis in their homeland’s
prosperity.