Overseas Pakistanis remittances declined by 13% Month on Month to $ 2.2 billion during April 2023 compared to $ 2.5 billion during March 2023, according the State Bank of Pakistan.
This marks a 29% decrease on a Year on Year basis in remittances, with analysts attributing the downfall to the current political turmoil in Pakistan in the wake of the arrest of former prime minister Imran Khan.
Khan is currently facing a court ruling in AL Qadir Trust and Toshaakhana cases which has led to uncertainty and instability in Pakistan. This, in turn, has led to a decrease in the confidence of overseas Pakistanis to invest in the country, resulting in a decline in remittances.
Economists have expressed their concerns over the decline in remittances, as it will have a significant impact on Pakistan’s sagging economy. Remittances are a lifeline for Pakistan’s economy, and the decrease will have a severe impact on the country’s balance of payments.
Pakistan witnessed an 11% decline in remittances during the first nine months (July-March) of fiscal year 2022/2023 to $20.53 billion.
In the month of March 2023, the inflows of remittances fell to $2.53 billion when compared with $2.83 billion in the same month of the last year. However, those grew by 27 per cent when compared with $1.98 billion in February 2023.
Dollar rise unstoppable
Further, the value of US dollar at interbank has also seen a surge, touching the high mark and reaching Rs. 290 level. Dollar at interbank was up by Rs. 5.15 and surpassed its previous high of Rs. 288.42 on April 11, 2023. This, in turn, will have an adverse impact on the cost of imports, leading to a surge in inflation and further hampering Pakistan’s economic growth.
The current political instability has also delayed the International Monetary Fund (IMF) loan deal for Pakistan, increasing the default risk of the country. According to Dubai-based veteran journalist M. Ali, “The default risk of Pakistan has grown, and the delay in the IMF loan deal will only add to it. This will also lead to a decrease in foreign investment in the country, further exacerbating the depleting economic condition.”
During the 10MFY23, remittances went down by 13% YoY to $ 22.7 billion as compared to $26.1 billion in 10MFY22.
Economists have urging the government to take immediate action to stabilize economy and address the current political instability to restore the confidence of overseas Pakistanis and investors.
As the situation in Pakistan unfolds to be uncertain, economists have warned that decline in remittances and increase in the value of the US dollar will have a severe impact on Pakistan’s economy. It will further increase inflation and a decrease in foreign investment in the country.
Internet suspension causes millions losses
The suspension of mobile broadband services in Pakistan has wreaked havoc on the economy, causing substantial losses for telecom operators and the government.
Authorities in Pakistan have suspended twitter, facebook, & Instagram services after the arrest of former prime minister Imran Khan since May 7th.
Khan enjoys a massive followers base on these social media platforms. Critics say that the government has taken this step to mitigate the PTI and Khan’s followers backlash.
Reportedly, telecom operators have suffered an estimated revenue loss of PKR 820 million as a result of the broadband services suspension. The government, meanwhile, has lost around PKR 28 million in tax revenue during the last two of days, as the country plunged into a simmering political crisis.
Digital apps, stock exchange feel the heat
The impact of broadband suspension has been felt not only by the telecom industry but also by individuals who depend on digital apps for their daily lives. Services such as Careem, InDrive, FoodPanda, and others have been disrupted, causing inconvenience and loss of business for many users.
The suspension has also given a shock to the stock market, with Pakistan Stock Exchange falling 298 points or 0.7% to close at 41,074.95 points on May 9th. This stock market decline reflects the wider economic impact of the suspension of broadband services followed by the arrest of Imran Khan.
This disruption has come at a time when Pakistan’s reeling economy is already facing significant challenges, including inflation and a widening current account deficit. This disruption has added to these challenges, and there are concerns that the economic impact may be long-lasting.
The situation serves as a reminder of the importance of a stable and reliable telecommunications infrastructure in today’s digital age. It also has highlighted the need for robust and resilient systems that can withstand unexpected events and disruptions.