Latest news with #PakistanEconomy
Arab News
09-07-2025
- Business
- Arab News
Gulf remittances drive record $38.3 billion inflow to Pakistan in FY25, surpassing IMF loan package
KARACHI: Pakistan received a record $38.3 billion in workers' remittances during the last fiscal year, reporting an increase of about $8 billion over a 12-month period that exceeds the country's ongoing International Monetary Fund (IMF) loan program, according to official data and analysts on Tuesday. The remittance surge from $30.25 billion in FY24 helped shore up the country's foreign reserves, prompting experts to says it is likely to push the current account into surplus for the first time in over a decade. The IMF Executive Board approved a $7 billion Extended Fund Facility (EFF) for Pakistan in April 2024, spanning 37 months, after acknowledging Islamabad's structural reforms and stabilizing macroeconomic indicators. The government described the bailout as critical to reviving an economy that had faced a prolonged financial crisis and balance-of-payments stress over the past two years. 'Remittances have actually rescued Pakistan beyond expectations. It was a significant jump of over $8 billion in annual remittances, which is more than the whole IMF program funding,' Shankar Talreja, head of research at Topline Securities Limited, told Arab News after the central bank released remittance figures for the last fiscal year. 'Thanks to the remittances, we will be able to record a current account surplus for the first time after 13 years of deficit and for only the second time in the last two decades,' he added. According to the State Bank of Pakistan, Saudi Arabia led all contributors during FY25, with remittances totaling $9.34 billion, followed by the United Arab Emirates at $7.83 billion, the United Kingdom at $5.99 billion and the United States at $3.72 billion. Remittances from Gulf Cooperation Council (GCC) countries excluding Saudi Arabia and the UAE totaled $3.71 billion, while EU countries contributed $3.53 billion. Commenting on the data, Mohammed Sohail, CEO of Topline Securities, wrote on social media: 'Record Remittances When Most Needed. In a year marked by economic challenges, overseas workers stepped up: Pakistan received a record USD 38.3 billion in remittances in FY25 — up 27 percent.' The fiscal year average stood at approximately $3.19 billion per month, well above the average of $2.52 billion in FY24.
Arab News
09-07-2025
- Business
- Arab News
Pakistan records $38.3 billion in remittances in FY25, with spike surpassing IMF loan package
KARACHI: Pakistan received a record $38.3 billion in workers' remittances during the last fiscal year, reporting an increase of about $8 billion over a 12-month period that exceeds the country's ongoing International Monetary Fund (IMF) loan program, according to official data and analysts on Tuesday. The remittance surge from $30.25 billion in FY24 helped shore up the country's foreign reserves, prompting experts to says it is likely to push the current account into surplus for the first time in over a decade. The IMF Executive Board approved a $7 billion Extended Fund Facility (EFF) for Pakistan in April 2024, spanning 37 months, after acknowledging Islamabad's structural reforms and stabilizing macroeconomic indicators. The government described the bailout as critical to reviving an economy that had faced a prolonged financial crisis and balance-of-payments stress over the past two years. 'Remittances have actually rescued Pakistan beyond expectations. It was a significant jump of over $8 billion in annual remittances, which is more than the whole IMF program funding,' Shankar Talreja, head of research at Topline Securities Limited, told Arab News after the central bank released remittance figures for the last fiscal year. 'Thanks to the remittances, we will be able to record a current account surplus for the first time after 13 years of deficit and for only the second time in the last two decades,' he added. According to the State Bank of Pakistan, Saudi Arabia led all contributors during FY25, with remittances totaling $9.34 billion, followed by the United Arab Emirates at $7.83 billion, the United Kingdom at $5.99 billion and the United States at $3.72 billion. Remittances from Gulf Cooperation Council (GCC) countries excluding Saudi Arabia and the UAE totaled $3.71 billion, while EU countries contributed $3.53 billion. Commenting on the data, Mohammed Sohail, CEO of Topline Securities, wrote on social media: 'Record Remittances When Most Needed. In a year marked by economic challenges, overseas workers stepped up: Pakistan received a record USD 38.3 billion in remittances in FY25 — up 27 percent.' The fiscal year average stood at approximately $3.19 billion per month, well above the average of $2.52 billion in FY24.
Arab News
03-07-2025
- Business
- Arab News
Pakistan central bank reserves rise to $14.51 billion, surpass IMF target
KARACHI: Pakistan's central bank foreign exchange reserves rose to $14.51 billion by the end of June, an increase of $5.12 billion over the previous fiscal year, the State Bank of Pakistan (SBP) said on Wednesday, marking a key milestone as the country closed out its 2024-25 financial year. The new figure exceeds the International Monetary Fund's (IMF) June 2025 reserves target under Pakistan's ongoing $7 billion Extended Fund Facility (EFF), and reflects a significant turnaround in the country's external account after years of balance-of-payments stress. Pakistan's forex reserves stood at $9.39 billion at the end of FY24, and have now climbed to their highest level since early 2018. The increase also pushes Pakistan's import cover — a key indicator of external sector strength — to 2.5 months, up from 1.7 months a year ago and less than one month during the 2022-23 crisis period. The rise in reserves was driven largely by non-debt inflows, including improved exports, growth in IT services, higher foreign direct investment, and record remittances from overseas Pakistanis, according to government finance adviser Khurram Schehzad. 'Reserves rising. Debt falling. Stability strengthening,' Schehzad posted on X, formerly Twitter, noting that the central bank's reserves now exceed the IMF's end-June target. He added that the debt-to-GDP ratio has declined from 75 percent in FY23 to an estimated 69 percent in FY25, reflecting improved macroeconomic management. Pakistan entered FY25 facing a challenging external financing outlook, with over $20 billion in debt repayments due during the year. However, a combination of improved current account discipline, fiscal consolidation, and bilateral inflows helped ease pressure on the rupee and shore up confidence in the central bank's position. Pakistan's economy grew an estimated 2.4 percent in FY25, up from 0.3 percent in the previous fiscal year, as inflation cooled and the rupee stabilized after a steep depreciation cycle in 2022-23. The IMF has encouraged Pakistan to maintain exchange rate flexibility and strengthen domestic revenue collection in order to ensure macroeconomic resilience. The improvement in external buffers is likely to boost investor sentiment at a time when the government is stepping up efforts to attract foreign direct investment and privatize state-owned enterprises. Further inflows, particularly from Gulf countries and China, are expected in the first half of FY26, which could help Pakistan meet its gross financing needs without resorting to expensive commercial borrowing. Despite the progress, risks remain. Pakistan's external debt servicing burden remains high, and its ability to maintain reserve adequacy will depend on continued inflows and fiscal discipline. Still, the end-June reserve level marks a notable turnaround from just two years ago when Pakistan was on the brink of default and foreign reserves had fallen below $4 billion, barely enough for three weeks of imports. With reserves now exceeding $14.5 billion, the country has gained critical breathing space to manage its external obligations and restore market confidence.
Arab News
23-06-2025
- Business
- Arab News
Pakistan stocks, rupee plunge as investors react to US strikes on Iran
KARACHI: Pakistan's stocks and currency markets tumbled on Monday as investors reacted to the United States' (US) foray into the Israel-Iran conflict, traders and analysts said. The benchmark KSE-100 index dropped more than 3 percent to 116,167 points, the lowest in more than six weeks, while the rupee continued to weaken against the US dollar in the seventh consecutive session on Monday. The index has plunged by nearly 5 percent since June 13 when Israel first hit Iranian military and nuclear targets in Natanz, Isfahan and Fordow, killing top generals and scientists among 78 people. 'Rising geopolitical tensions following a US strike on Iran shook investor confidence, causing the KSE-100 Index to drop by 3.2 percent,' Mohammad Waqas Ghani, head of research at JS Global Capital Ltd., told Arab News, adding that this was the fourth largest single-day decline in terms of points historically. The attacks on Iran by the US, which followed Israeli strikes, have intensified the war and deepened geopolitical tensions in the Middle East, sending jitters to markets across the globe. Monday's 3.2 percent fall was the worst since May 8 when the index had plunged 5.9 percent day-on-day, according to Ghani. 'The spike in global oil prices has further intensified concerns about Pakistan's external account vulnerabilities,' he added. Cash-strapped Pakistan, which is trying to revive its debt-ridden economy with the help of International Monetary Fund's $7 billion program, spent $17 billion on oil imports last year. Raza Jafri, head of research at Intermarket Securities Ltd., attributed the day's fall to redemptions at mutual funds and possible margin calls. 'Regional tensions are the main reason behind the weak sentiment,' he said, adding that if there was no further escalation, the value buying was expected to come through. RUPEE DROP The ongoing tensions have also impacted the Pakistani currency that lost another 0.06 percent as the greenback closed at Rs283.87, according to State Bank of Pakistan (SBP) data. The rupee is constantly falling and has devalued 0.3 percent since the start of Iran-Israel conflict. 'The rupee is feeling the heat of this war, very negligibly though,' Zafar Paracha, secretary-general of the Exchange Companies Association of Pakistan, told Arab News. 'This stability in the exchange rate reflects the overall macroeconomic stability the country has achieved.'
Arab News
16-06-2025
- Business
- Arab News
Pakistan holds interest rate at 11% as Mideast conflict poses new economic challenges
KARACHI: Pakistan's central bank kept its key interest rate unchanged at 11% on Monday, maintaining a cautious stance, as financial analysts warn heightened Middle East tensions and volatile global oil prices add new risks to the country's fragile external sector and inflation rate. A Reuters poll released earlier on Monday had shown analysts revising their expectations for a rate cut in light of Israel's military strikes on Iran that began on Friday and have since intensified, pushing up global commodity prices. 'The [Monetary Policy] Committee noted some potential risks to the external sector amidst the sustained widening in the trade deficit and weak financial inflows. Moreover, some of the proposed FY26 budgetary measures may further widen the trade deficit by increasing imports,' the central bank said, announcing its decision to leave the rate unchanged. 'In this regard, the Committee deemed today's decision appropriate to sustain the macroeconomic and price stability.' Monday's decision comes days after Pakistan announced its Rs16.7 trillion ($62 billion) annual budget targeting 4.2% growth, up from a provisional estimate of 2.7% for the current year. The MPC noted that despite the widening trade deficit, the current account remained broadly balanced in April, and foreign exchange reserves rose to $11.7 billion as of June 6 after the completion of the first review under the International Monetary Fund's Extended Fund Facility. The country expects $14 billion foreign exchange reserves by the end June. The bank paused its policy rate easing cycle in March, following cumulative cuts totaling 1,000 basis points from a record high of 22%, and resumed it with a 100-basis-point reduction in May. Inflation in Pakistan has slowed markedly since peaking at around 40% in May 2023. However, last month it rose to 3.5% year-on-year, above the finance ministry's projection of up to 2%, partly due to the fading of favorable base effects. The central bank projects average inflation between 5.5% and 7.5% for the fiscal year ending this month. 'Going forward, inflation is expected to trend up and stabilize in the target range,' the MPC said. The escalating tensions in key oil-producing regions have triggered a sharp surge in global oil prices with brent, West Texas Intermediate (WTI) and Arab Light crude oils showing a 12% week-on-week increase and daily spikes exceeding 6%, Arif Habib Ltd, a Karachi-based research firm, said in its latest note. 'WAIT-AND-SEE' STANCE Amreen Soorani, the head of research at Al Meezan Investment Management, said the SBP's decision was primarily driven by emerging geopolitical risks that had affected international oil prices. 'Even with substantial improvements in Pakistan's inflation and external account, the central bank seems to have taken a cautious 'wait-and-see' stance,' she told Arab News. The regional tensions, she said, were posing potential challenges to Pakistan's balance of payment and inflation rate. Cash-strapped Pakistan spent $17 billion on oil imports last year. Soorani said petroleum was a major driver of Pakistan's trade deficit, accounting for approximately 30% of all imports and consuming around 55% of export proceeds. 'All else being equal, a $5 per barrel increase in average oil prices for the year would worsen our trade deficit by an estimated $900 million annually,' the analyst said. Pakistan is closely watching the global oil market, where brent and WTI crude traded at around $73.5 and $70.5 a barrel on Monday and fell 1% after opening lower in the Western markets, Finance Adviser Khurram Schehzad said. 'Global calls for increasing supplies is (are) one of the reasons among potential resolve of the Israel-Iran conflict by the US,' Schehzad said. Muhammad Waqas Ghani, head of research at JS Global Capital Ltd., said the SBP's current monetary stance was aligned with the IMF's recommendation to Islamabad to maintain a sufficiently tight monetary policy to anchor inflation. 'Additionally, the committee may have preferred to wait for greater clarity on the budget measures and their potential impact on inflation dynamics,' he told Arab News. STOCKS GAIN, RUPEE DECLINES Pakistani stocks gained by 82 points to close at 122,225 points 'despite geopolitical risk amid speculations over SBP policy announcement,' Ahsan Mehanti, chief executive officer at Arif Habib Commodities Ltd, said. The rupee declined for the fifth consecutive session and inched down 0.07% to Rs283.17 per dollar. Qazi Owais Ul Haq, a currency dealer at Arid Habib Ltd. said Pakistan's currency was 'feeling the heat' as regional tensions surge. 'They are trying to hold the rate but as a third-world country war affects us,' Haq told Arab News. Pakistan's top trade body, the Federation of Pakistan Chamber of Commerce & Industry (FPCCI) and the Karachi Chamber of Commerce and Industry, (KCCI) said the central bank's decision to maintain the policy rate at 11% was disappointing 'The SBP has not only ignored market signals but has also dampened business sentiment at a time when the economy urgently requires a boost,' KCCI President Muhammad Jawed Bilwani in a statement.
