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Express Tribune
an hour ago
- Business
- Express Tribune
Remittances cross $34.9b for FY2025
Listen to article The State Bank of Pakistan (SBP) reported a robust increase in workers' remittances for May 2025, providing crucial support to the external sector amid a widening trade imbalance caused by rising imports and declining exports. According to the latest data, total remittance inflows reached $3.7 billion in May, up around 14% year-on-year. This upward trajectory has been a consistent feature throughout the ongoing fiscal year 2024-25, offering some relief to Pakistan's external account pressures. "Workers' remittances reflect robust growth of 16% month-on-month and 13.7% year-on-year, signalling sustained confidence of overseas Pakistanis in formal banking channels," said Ali Najib, Deputy Head of Trading at Arif Habib Limited (AHL). Cumulative inflows from July to May FY2025 stood at $34.9 billion, marking a strong 28.8% increase from the same period last year, he said. This rise is likely due to improved documentation, regulatory support, and seasonal Eid-related transfers. Saudi Arabia, the United Arab Emirates (UAE), the United Kingdom (UK), and the United States (US) remained the top contributors, with the rising trend offering vital support to foreign exchange reserves. Saudi Arabia led with $913.9 million, followed by the UAE at $754.2 million and the UK at $588.1 million. The UAE showed the strongest growth, with a 45.7% increase during July-May, and Dubai alone sending $567.2 million in May. European Union (EU) countries posted a 28.1% rise, with Italy contributing $118.2 million. Significant year-on-year growth was seen from non-traditional markets such as South Africa (74%), Ireland (53.1%), and Malaysia (40.4%). This reflects the Pakistani population's struggle for gradual diversification as traditional markets become more saturated. Monthly figures showed a peak in March 2025 at $4.05 billion, with steady inflows continuing through May. The fiscal year's average monthly remittance stood at $2.52 billion, up 10.7% from FY24. Experts attribute the surge to favourable economic conditions in host countries, a stable exchange rate, and Pakistan's push to formalise channels through digital platforms like Roshan Digital Account and SBP EasyData. These reforms have improved transparency and accessibility, making formal remittance channels more attractive for overseas Pakistanis. Despite gains, concerns remain about the sustainability and inclusivity of this growth. Heavy reliance on traditional markets - accounting for 61% of inflows — exposes Pakistan to risks from labour policy changes or economic slowdowns in those regions. Remittances from the US declined 12.4% year-on-year in May 2025, possibly due to regulatory tightening or demographic shifts in the diaspora. High transfer costs between 5% and 7% — continue to drive users toward informal channels like hawala. Persistent exchange rate gaps between official and parallel markets also reduce incentives to use formal systems. Data issues complicate accurate analysis. There is limited reporting on remittance purposes, and foreign currency account flows are included in headline figures. Structural challenges persist as well. Most Pakistani workers abroad are in low-skilled jobs, especially in Gulf countries, making inflows vulnerable to wage stagnation and automation in labour-importing countries such as Saudi Arabia under its Vision 2030 reforms. Moreover, Pakistan's policies have yet to fully engage the diaspora in high-value activities beyond basic remittances, such as investments in bonds or startups. Seasonal fluctuations also affect stability. The 16% month-on-month jump in May 2025, partly due to Eid, highlights the volatility of these flows. This contrasts from April-May patterns in previous years, underlining their unpredictability. To improve resilience, experts recommend diversifying labour destinations, cutting transfer costs through fintech collaboration, publishing detailed remittance data, and upskilling workers to meet demand in advanced economies. Such measures are critical to ensuring that remittances continue to serve as a resilient and growth-supporting element of Pakistan's economy, which remains reliant on these inflows for covering 8-10% of its GDP.
Express Tribune
2 days ago
- Business
- Express Tribune
Current account surplus termed historic achievement
Pakistan posted a $1.9 billion current account surplus in July-April 2024-25, reversing a deficit of $1.3 billion in the same period of last year, according to the Economic Survey released by the Ministry of Finance on Monday, which called it a historic achievement, made only once before in FY 2003, when the surplus reached $4.1 billion. At a press conference, Finance Minister Muhammad Aurangzeb commented, "In July-April FY25, we had a current account surplus of $1.9 billion due to improvement in overall exports." The surplus came also on the back of remittances, which hit a historic high in March 2025, and a sharp rise in IT exports, bolstering the external account as the trade balance remained in the red. The report showed that the trade balance in goods recorded a deficit of $21.3 billion ($18 billion last year), fuelled by an 11.8% rise in imports that outpaced export growth of 6.8%. Similarly, the services account deficit widened to $2.5 billion ($2.4 billion last year) as imports grew 9.3%, outpacing export growth of 7.9%. The primary income account deficit rose $803 million to $7.1 billion ($6.3 billion last year) owing to increased dividend repatriation and interest payments. In contrast, remittances hit a historic monthly high of $4.1 billion in March. Overall, remittances grew 31% to $31.2 billion in July-April FY25 against $23.9 billion last year, supported by the government and State Bank-led structural reforms. "Remittances will reach $37-38 billion in this fiscal year. Two years ago, the inflows were around $27 billion," the finance minister remarked. "Some 814,000 accounts have been opened by the Pakistani diaspora under the Roshan Digital Account," he added. Moreover, the financial account recorded a net outflow of $1.6 billion during July-April FY25, a reversal from the net inflow of $4.2 billion last year. The decline was mainly due to higher government debt repayments and a sharp drop in net liability, which fell to negative $3.2 million from $2.6 billion last year, indicating a marked slowdown in external borrowing, the report mentioned. Net foreign direct investment (FDI) amounted to $1,785 million during July-April FY25, slightly down from $1,835 million last year, reflecting a 2.7% decrease. The survey highlighted heightened global risk aversion amid geopolitical tensions and economic uncertainty, alongside a slowdown in global trade and investment flows affecting developing economies, and declining China's outbound investments as key reasons for the drop in the FDI. The current account surplus bolstered foreign exchange reserves to $16.64 billion ($11.50 billion with the State Bank and $5.14 billion with commercial banks) by May 27, 2025, aiding exchange rate stability. The average exchange rate for July-April FY25 was Rs278.72/$. In its review, Arif Habib Limited (AHL) remarked that the current account deficit was projected at a sustainable 0.8% of GDP over the medium term, aided by moderating energy imports, IT export growth and skilled labour remittances. US tariffs on Pakistan As the international community grapples with the effects of Trump's tariffs and their potential economic fallout, the evolving situation poses downside risks alongside opportunities for Pakistan's exports. At present, Pakistan lies at the 33rd position in terms of trade surplus with the US as its exports to Washington amounted to 17% of its total exports. In 2024, exports from the US to Pakistan totalled $2.14 billion while imports stood at $5.47 billion, said the Economic Survey. Considering Pakistan's lower reciprocal tariffs, which make the country a more accessible market for the US, there is a possibility that the country's trade will not be adversely impacted by the US tariffs and it will be able to maintain stable trade ties while larger economies will bear the brunt of economic pressure. Pakistan imposes a lower trade-weighted average tariff on the import of US goods (7.3%) compared to US tariffs on Pakistan's exports (9.9%). Under the Trump administration, the US has levied a 30% additional tariff on Pakistan. However, competitor countries such as Cambodia (49%), Vietnam (46%), China (145% and above) and Bangladesh (37%) face significantly higher tariffs, giving Pakistan an edge. However, India will pay a lower tariff of 27%. In FY24, according to the report, Pakistan imported over $700 million worth of raw cotton, the largest import item from the US. This number is expected to increase further in the ongoing year. By sourcing high-quality cotton from the US and exporting back value-added finished goods, Pakistan has built a mutually beneficial trade cycle. This model not only boosts industrial competitiveness but also strengthens long-term access to the US market. The government is engaged in consultations with the private sector to devise policies that will increase cotton imports from the US, solidifying Pakistan's role as a reliable textile supplier, the report stated, adding that this comparatively open market profile strengthens Pakistan's case for preferential treatment or improved market access. ZOYA MEDINA
Arab News
20-05-2025
- Business
- Arab News
Pakistan regulator unveils new measures to strengthen Shariah-compliant market intermediaries
KARACHI: The Securities and Exchange Commission of Pakistan (SECP) is proposing new measures aimed at strengthening the presence and operations of Shariah-compliant intermediaries within the capital market, the regulator said in a statement this week. Pakistan's Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest and align the country's entire banking system with Islamic principles by 2027. Following the order, the government and the State Bank have taken several measures ranging from changing laws to issuing sukuk bonds to replace interest-based treasury bills and investment bonds. However, documents seen by Arab News earlier this year showed Pakistan's government had failed to achieve a target set by the central bank to increase the share of Islamic banking deposits in the country by 50 percent by January this year. 'The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors,' the SECP said about the latest proposal. 'The paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so.' Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials, Pakistan's first digital mutual fund aggregator. The platform brings together multiple Asset Management Companies (AMCs) and their mutual funds under one roof. It is a venture of ITMinds Limited, a wholly owned subsidiary of the Central Depository Company of Pakistan (CDC). In order to facilitate Roshan Digital Account (RDA) clients, creating a separate category of Shariah-compliant intermediaries on the websites and mobile apps of Islamic banks would also be explored in coordination with relevant stakeholders, the SECP said.
Business Recorder
20-05-2025
- Business
- Business Recorder
Shariah-Compliant Intermediaries: SECP issues consultation paper
ISLAMABAD: In order to facilitate Roshan Digital Account (RDA) clients, the Securities and Exchange Commission of Pakistan (SECP) has proposed creation of a separate category of Shariah-compliant intermediaries on the websites/mobile apps of Islamic banks. In this regard, the SECP Monday issued a consultation paper proposing measures to promote Shariah-compliant intermediaries in the capital market. The paper is in line with the broader objective of SECP to facilitate the provision of Shariah-compliant services within its regulated sectors. The SECP has also proposed that Shariah-compliant institutional investors under regulatory domain of SECP (such as mutual funds, pension funds, private funds, Takaful operators, window Takaful operators, modarabas, Modaraba Management Companies, NBFCs, etc.) be required to route more of their business through Shariah-compliant brokers in a phased manner. This measure shall not only promote Shariah-compliant brokers but also provide the institutional investors access to greater expertise in Shariah-compliant investments. The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors. In addition, the paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so. Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials. Islamic financial institutions, including Islamic window operations, may be encouraged to utilize Shariah-compliant institutions and intermediaries excluding securities brokers, in instances where they are not obligated to do so. This may include using Takaful services for their insurance needs and Shariah-compliant AMCs for investment purposes, SECP proposals added. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
RDA inflows down 25%, clock in at $177mn in April 2025
Inflows through the Roshan Digital Account (RDA) clocked in at $177 million in April, reflecting a decline of 25% compared to $235 million in March 2025, the State Bank of Pakistan (SBP) said Thursday. Out of the total April inflows, $24 million has so far been repatriated, while funds to the tune of $159 million have been utilised locally. The central bank shared that the total number of RDA accounts opened reached 814,244 from 805,442 a month ago at March-end, showing a month-on-month increase of 8,802 accounts. As per the latest data available on the SBP's website, the cumulative RDA inflow clocked in at $10.18 billion by the end of the previous month, out of which $1.757 billion has so far been repatriated, while funds to the tune of $6.527 billion have been utilised locally. Consequently, total net repatriable liability stands at $1.897 billion as of April-end. Out of the total outstanding liability, an amount of $1,356 million is with Naya Pakistan Certificates, with $456 million in conventional NPCs and $900 million in Islamic instruments. Similarly, an amount of $444 million is 'balances in accounts', the SBP data showed. Meanwhile, Roshan Equity Investments declined monthly and stood at $58 million, registering a monthly decline of 6%. Background RDA is a significant source of foreign exchange inflows for Pakistan, which is grappling with liquidity challenges. The initiative was launched in September 2020 by the SBP and offers up to 8% profit on US dollar investments.
