Overseas remittances are the backbone of Pakistan’s economy, but they have been declining in recent years. According to a report by the World Bank, the volume of remittances to Pakistan fell by 13.6% in the fiscal year 2022-23. This is the lowest level of remittances in three years, and it is a major concern for the government.
There are a number of factors that have contributed to the decline in remittances. One factor is the economic slowdown in Pakistan. As the economy has slowed down, so has the demand for labor from overseas countries. This has led to fewer Pakistanis being able to find work abroad, and therefore fewer remittances being sent home.
Another factor that has contributed to the decline in remittances is the rise of the gray market. The gray market is a system of informal money transfers that bypasses the official banking system. In the gray market, people can send money home at a higher exchange rate than they would get through the official channels. This has made it more attractive for people to send money through the gray market, and it has led to a decline in remittances through the official channels.
The government needs to take steps to address the decline in remittances. One step that the government could take is to crack down on the gray market. The government could also make it easier for people to send money home through the official channels. This could involve simplifying the paperwork and reducing the fees associated with sending money through the official channels.
In addition to the factors mentioned above, there are a few other things that the government could do to encourage overseas Pakistanis to send remittances through official channels. The government could offer tax breaks to people who send money home through official channels. The government could provide incentives to banks and other financial institutions to offer better rates for remittances. The government could work with overseas Pakistani communities to raise awareness of the benefits of sending money home through official channels.