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Pakistan loses US$ 3.7 billion in remittances In less than a year
As the Pakistani rupee slides, Pakistanis abroad choose informal channels to transfer money home. The International Monetary Fund is unimpressed by the government budget. Meanwhile, as the military tries to prevent Imran Khan from running in the upcoming election, Jahangir Tareen – a businessman and former Khan ally – set up a new party with former PTI members.
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Islamabad (AsiaNews) – In less than a year, Pakistan lost US$ 3.7 billion in remittances due to the devaluation of the Pakistani rupee and the increasingly unfavourable exchange rate.
Increasingly, Pakistanis living abroad, especially those in the Gulf countries, prefer to use informal channels to send remittances home, causing further losses.
The latest data from the State Bank of Pakistan show that the country has been short of liquidity for months. As a result, the Pakistani rupee has continued to depreciate over the past year with pressure on foreign exchange reserves.
Given the situation, Pakistanis living abroad have resorted to unofficial channels to transfer money home, this according to the Dawn newspaper.
Remittances contribute significantly to Pakistan's balance of payments and constituted 9 per cent of its GDP in 2021, World Bank data show.
In the last 11 months, Pakistan received only US$ 24.831 billion in remittances, down from US$ 28.5 billion the previous fiscal year, a drop of almost 13 per cent. Inflation, meanwhile, rose to 38 per cent.
At present, Pakistan’s foreign exchange reserves are barely enough to cover a month's imports. For nearly a year, Pakistani authorities have tried to secure a tranche of more than a billion dollars from the International Monetary Fund (IMF) and unlock access to a US$ 6.5 billion loan package.
Yesterday, two weeks before the deadline for the release of the loan, the IMF expressed dissatisfaction with the budget presented by the Pakistani government last week. The IMF had asked Islamabad to implement a series of reforms before disbursing any funds.
For the international lending agency, the tax amnesty included in the budget further reduces the fairness of the tax system, limiting the resources for the most vulnerable. This creates “a damaging precedent”, this according to Esther Ruiz Perez, the IMF's resident representative for Pakistan.
She hinted, however, that “refining the budget” was still possible before the Extended Fund Facility ended at the end of the month.
According to the Moody's rating agency, if the bailout fails, the country will face a situation of economic default.
Meanwhile, repression continues against supporters of Imran Khan, the former prime minister who was forced to resign in April last year after falling out of favour with the military, which has always dominated the country’s politics.
In recent weeks, at least 100 members of his Pakistan Tehreek-e Insaf (PTI), including several former ministers, have resigned from the party.
Most observers believe that the military is trying to prevent Khan from taking part in the general election scheduled for October. The former cricket star has remained popular with voters.
After police arrested him on 9 May, protesters attacked military barracks and government facilities.
The military reacted by detaining PTI supporters, searching homes, intimidating party members, and holding people in solitary confinement without charge, a practice used by security forces in the past.
Last week, Jahangir Tareen, a businessman and a former Khan ally, founded a new party, Istehkam-e-Pakistan (Pakistan Stability Party), with many PTI defectors.
Although it is unclear whether Khan will be allowed to run, his chances of victory are almost nil despite strong popular support.
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