November 11, 2023 (MLN): Greenback is a rare commodity in Pakistan for people and the government. Thus when tough actions – administrative controls over informal means of buying USD and sending them out of Pakistan – bring fruits with the support of sticknomics, jubilations are warranted.
The spread between open market, interbank and grey market has converged. Hence, the growth in remittances.
Mind you, this is the first-time remittances growth has turned green and double digit in more than nearly two years.
That's a function of increased confidence in the economy, reduction in default probability, SBP's incentives for banks to enhance remittances and lesser financial incentives to send via illegal channels. The real estate rally is yet to begin.
Pakistan is in dire needs of attracting USD. While SIFC is primarily focusing on low hanging one off fruits in the form of Foreign Direct Investment (FDI) primarily from Arab countries.
It's much more important to develop exportable surplus and value-added IT services industries to globally integrate Pakistan's labour force and keep the USD earned within the country. Export growth is the only way to grow sustainably.
The author is an independent economic analyst and writes on Twitter and Linkedin.
