By Staff Reporter
KARACHI: Pakistan received $2.4 billion in remittances from its overseas workers in December, up 13.4 percent from a year earlier, as a stable currency and improved economic outlook encouraged more inflows through official channels, the central bank data showed on Wednesday.
The increase was mainly driven by Pakistani workers using official banking channels to send money home, taking advantage of the stable exchange rate and improved economic outlook.
The country has been implementing structural reforms under a $3 billion loan program from the International Monetary Fund, which has helped ease external pressures and boost investor confidence.
Pakistan has also secured funding from multilateral lenders such as the World Bank and the Asian Development Bank, which are linked to the IMF program.
The latest remittance figures came ahead of the IMF’s executive board meeting on Thursday, where it will consider approving the next $700 million tranche for Pakistan. The country received $1.2 billion as the first installment in July.
“Stable currency and signs of economic stability are helping in receiving above average workers remittance in Pakistan,” said analyst Mohammed Sohail at Topline Securities Ltd. in Karachi.
The rupee has recovered from a record low of 307 per dollar in September, when the caretaker government and the central bank cracked down on illegal currency trading and money transfers. The currency was trading at 281 per dollar on Wednesday, after the government met the IMF’s strict criteria and benchmarks, which led to sweeping reforms for the exchange businesses sector.
As a result, the gap between the official and the open market rates has narrowed from a high of over 10 percent to almost zero, making it more attractive for workers to use formal channels to remit funds.
“I think the elimination of the gap between interbank and open market rate along with improvement in exchange rate parity and clarity regarding the direction of exchange rate helped improve remittances through formal channels,” said analyst Samiullah Tariq at Pak-Kuwait Investment Co.
Saudi Arabia remained the largest source of remittances for Pakistan, with inflows increasing by 9 percent to $578 million in December. The United Arab Emirates was the second-largest contributor, with remittances surging 27 percent to $419 million. The U.K. also saw a 15 percent rise in remittances to $368 million.
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