Remittances expected to maintain upward trend, says finance ministry
The finance ministry on Tuesday in its monthly economic outlook report said that the remittances were expected to maintain their upward trajectory due to the seasonal factors of Ramazan and Eid.
“The external account position has strengthened, driven by continued increase in exports and a noteworthy rise in remittances despite an upward trend in imports,” it said, adding that the seasonal factors “will help to keep the current account within manageable limits”.
The current account deficit (CAD) had declined to $12 million in February from $420m in the preceding month — with the country recording a surplus of $691m in the first eight months of FY25 against a CAD of $1.7 billion a year ago.
Experts have attributed the surplus during the eight months to the surge of 32 per cent in remittances. It was also observed that due to Ramazan, higher inflows supported the country in keeping the exchange rate stable with relatively better foreign exchange reserves.
However, the central bank’s foreign exchange reserves, which have the target to reach $13bn by the end of FY25, are still at around $11bn.
The report noted that workers’ remittances stood at “an impressive growth” of 32.5pc — with an inflow of $24bn during July-Feb fiscal year 2025, as compared to $18.1bn last year.
It highlighted that the largest share from workers’ remittances came from Saudi Arabia (24.6pc) followed by UAE (20.3pc).
On foreign direct investment (FDI), it said that it was recorded at $1,618.4m — a 41pc increase from the figure in the previous year.
“The largest share (40.9pc) is from China $661.8m,” it said, followed by the UK at 10.3pc and Hong Kong at 9.9pc.
“The power sector received net FDI of $578.2m (35.7pc share), followed by financial business with $466.4m (28.8pc) and oil & gas exploration with $196.6m (12.1pc),” it said.
The report also highlighted that the fiscal deficit had narrowed, stating: “The fiscal deficit reduced to 1.7 pc of GDP in July-Jan FY2025 from 2.6pc last year.”
Regarding trade, the finance ministry highlighted that imports and exports were expected to rise, noting that the country’s key exports markets comprised of UK, US, European countries and China — all fluctuating above the potential level of 100.
“During July-Feb FY2025, goods exports increased by 7.2pc to $21.8bn compared to $20.4bn last year,” it said, adding that “imports recorded an increase of 11.4pc to reach $38.3bn”.