Remittances to soar to record $35bn in FY25

December 07, 2024 (MLN): Remittances are projected to reach an all-time high of $35 billion in FY25, with monthly inflows averaging $2.9bn so far, according to the State Bank of Pakistan (SBP) Governor, Mr Jameel Ahmad.

Speaking at an event at the Overseas Investors Chamber of Commerce and Industry (OICCI), Mr. Ahmad underlined the robust growth in remittances as a crucial factor in bolstering the country’s foreign exchange reserves.

Finance Minister Muhammad Aurangzeb, alongside SBP Governor Jameel Ahmad, visited OICCI to discuss key economic developments with the business community. 

The business community and media were apprised that the Finance Minister, heading the ECC, has initiated a practice to regularly monitoring the prices of basic products and commodities. 

The decline in inflation is a welcome relief for the masses and the timely monitoring enables the government to take effective actions, making policies more impactful and beneficial to the people.

The Finance Minister also informed that the government has taken decisive action against smuggled petroleum products, scrutinizing thousands of petrol pumps and shutting down hundreds involved in the illicit trade.

This crackdown has resulted in a historic growth in documented sales, supporting economic activity and boosting revenue.

He further stated that the government is actively working to shut down smuggled and illegal tobacco sales, particularly in informal markets and bazars.

This effort aims to curb the illicit trade, which will have a positive impact on the economy and public health.

The SBP is set to launch a new platform, InvestPak, allowing individuals and corporations to invest directly in government securities. By bypassing banks, investors can earn better returns, encouraging a culture of savings and investment in the economy.

There has been a notable shift towards the localization of imported raw materials, with top FMCGs in Pakistan sourcing more materials locally.

This import substitution has resulted in a significant reduction in imports, with volumes rising and only 35% of materials now sourced through imports.

This trend has contributed to stable forex reserves, currency stability, and overall external de-risking of the economy, he added. 

For instance, if 70% of the raw material was being sourced through imports earlier, it's now down to around 35%.

This import-substitution could be one of the key reasons why imports are not rising as such (4% in 5M) while exports have shown consistent growth (13% in 5M), resulting in better forex reserves, currency stability and overall external de-risking of the economy.

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