Reversing the declining trend of remittances.

It goes without saying that remittances by overseas Pakistanis have been the biggest savior. Lately, a declining trend has been observed in the influx of remittances, which can be attributed to the growing use of informal channels.

It is regrettable that the Government of Pakistan (GoP) has not been able to offer incentives to the remitters. One of the reasons is that Pakistanis living in the Middle East, particularly Saudi Arabia and the United Arab Emirates (UEA), because of little knowledge are easily lured by Hawala/Hundi operators.

It is a common complaint that the banking system operating in rural areas is still inefficient as compared to the Hawala/Hundi operators. Account holders say at the time in the formal banking system transfer takes 3 to 7 seven days. As against this, Hawala/Hundi operators deliver the money in less than 24 hours.

The reason for rising remittances from the United States and Europe is the presence of anti-money laundering laws in these countries. On top of that now more and more educated/trained Pakistanis are being hired by the US and European companies.

Experts are of the view that the remittances by overseas Pakistani can be increased manifold if educated/ trained youth are able to get jobs in overseas companies. Remote working is a blessing, but the youth has to meet the requirements of overseas employers.

According to the data released by the State Bank of Pakistan (SBP), the country's monthly remittances posted a decline of 5% MoM and 14% YoY to close in at US$2.1 billion. This took the total remittance inflow during 5M FY23 to US$12 billion, down 10% YoY.

Declines in the inward flow of remittances were seen across all the major host countries during November 2022 with the greatest declines coming from the two largest markets of KSA and UAE, each posting double-digit declines on MoM basis.

On a cumulative basis, apart from the United States, which posted an increase of 4%YoY during 5MFY22, all the major markets posted declines ranging from 8% to 14% in the wake of economic slowdowns in the host markets and rising inflation.

One of the prime observations is that Hundi, Hawala and the black market continue to dent the official inflow of remittances...