Decline in Gulf remittances to cause unemployment in Pakistan

In this file photo, Money dealers count Pakistani rupees, right, and US dollars at a currency exchange in Islamabad on March 12, 2014. (AFP)
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Updated 25 April 2020
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Decline in Gulf remittances to cause unemployment in Pakistan

  • Remittances to South Asia are projected to drop by 22 percent
  • Decline is largely due to job and wage losses of migrant workers

KARACHI: As remittances sent home by migrant workers to South Asia are expected to sharply decrease amid the global economic slowdown caused by the COVID-19 pandemic, Pakistani experts say investment in vital sectors at home will decline, causing huge unemployment.

Global remittances are projected to decline by about 20 percent this year from $714.2 billion in 2019, the World Bank said in a statement on Wednesday. Remittances to South Asia are forecast to drop by 22 percent to $109 billion.

The projected fall is largely due to job and wage losses of migrant workers in host countries and will deal a heavy blow to economies in the developing world.

The International Monetary Fund (IMF) estimates that Pakistan’s remittance will drop by over $5 billion during the fiscal year 2020 and 2021, as activity in Gulf countries decreases.

Saudi Arabia and the United Arab Emirates are the main hosts for overseas Pakistani workers and largest sources of Pakistan’s remittances.

“The decline in remittance projected by different sources after the COVID-19 outbreak, world recession and depression greater than that of 1930, would badly hit Pakistan’s economy, which was already sluggish in the pre-coronavirus period,” senior economist Dr. Ikram Ul Haq told Arab News.

“It will squeeze investment in the real estate, housing and construction sector that have been playing a vital role for demand in over 40-plus industries and creating huge employment,” he said.

Pakistan Institute of Development Economics (PIDE) projects that the remittances will decline by 9 percent to 14 percent from the projected target of $23.8 billion in the fiscal year 2020 and will range between $14.13 billion and $22.54 billion in FY21 against projected inflows of $26.4 billion.

“In the coming days, if remittances decline drastically, as projected, it is going to be negative in two ways: by forcing the government to borrow more externally to keep foreign exchange reserves and by lowering investment in vital areas of the economy, which will decrease GDP growth more than estimated,” Dr. Haq said.

While according to the IMF, the COVID-19 shock will affect Pakistan’s balance of payment, some economists argue that it will be largely compensated by a decline in global oil prices and imports.

“The decline in imports will be more than any likely dip in exports and remittances,” senior economist Muzamil Aslam told Arab News. “This implies that the balance of payment situation will not be too drastic in the post COVID-19 days,” he argued.

On Thursday Pakistan’s central bank said that the current account deficit had improved by 74 percent from $10.3 billion to $2.8 billion due to declining imports in the July-March 2020 period.


Trump hosts Pakistan army chief for unprecedented lunch, confirms Iran discussed

Updated 19 June 2025
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Trump hosts Pakistan army chief for unprecedented lunch, confirms Iran discussed

  • This was the first time in years that a Pakistani army chief was hosted by a sitting US president at the White House
  • Munir was widely expected to press President Trump not to enter Israel’s war with Iran and to seek a ceasefire

ISLAMABAD: US President Donald Trump on Wednesday hosted Pakistan’s army chief for lunch in an unprecedented White House meeting, after which he told reporters he was “honored” to meet Field Marshal General Asim Munir and that the two had discussed the ongoing Iran-Israel crisis.

This was the first time in many years that a Pakistani army chief was hosted by a sitting US president at the White House, highlighting Washington’s renewed interest in maintaining influence in South Asia as regional tensions flare.

After the schedule for the lunch was announced this week, Pakistani media widely speculated that Munir would press Trump not to enter Israel’s war with Iran and to seek a ceasefire. A section of Pakistan’s embassy in Washington represents Iran’s interests in the United States as Tehran does not have diplomatic relations with the US.

Munir’s White House meeting during the ongoing Mideast conflict has also fueled speculation in Islamabad that Washington could push Pakistan to align more openly with the US position, which has historically been supportive of Israel. Such pressure could complicate Pakistan’s delicate balancing act in the Middle East, where it maintains close ties with Iran and other Gulf partners and sympathizes with the Palestinian cause but seeks to avoid getting dragged into regional rivalries that could inflame tensions at home.

“Well, they [Pakistan] know Iran very well, better than most, and they’re not happy about anything [Iran-Israel conflict],” Trump said in response to a question by a reporter after his meeting with Munir on whether Iran came up in the discussion.

“It’s not that they’re better with Israel. They [Pakistan] know them both actually, but they probably, maybe, know Iran better, but they [Pakistan] see what’s going on. And he [Field Marshal General Asim Munir] agreed with me.”

Trump did not specify what the Pakistani general had agreed with him on, and went on to talk about last month’s military conflict between India and Pakistan that the US president has publicly claimed credit for ending with a ceasefire.

Nuclear-armed neighbors India and Pakistan engaged in their fiercest military conflict in decades between May 7-10, exchanging drones, missiles and artillery for nearly four days before Trump announced he had brokered a truce.

“The reason I had him [Munir] here, I wanted to thank him for not going into the war [with India], just, you know, ending the war,” Trump said, also giving credit to Indian Prime Minister Narendra Modi. “So, I was honored to meet him [Munir] today.”

Tensions between Israel and Iran have spiked sharply since last Friday when Israeli forces struck multiple targets including Iranian nuclear sites and senior officials. Iran retaliated with attacks on Israeli territory, raising fears of a wider Middle East war that could threaten global energy supplies and regional stability.

Pakistan, which shares a long border with Iran and maintains historic ties with Tehran, has repeatedly called for de-escalation and a ceasefire in the region. Defense Minister Khawaja Asif told Pakistan’s Geo TV that Munir’s White House visit would give the army chief a chance to share Pakistan’s perspective on the conflict and push Washington to help prevent further escalation.

Pakistan’s military plays a key role in shaping the country’s foreign policy, and Munir’s high-profile White House invitation is being seen as part of Washington’s broader effort to recalibrate ties with Islamabad, a vital but often difficult ally for the US in South Asia.

Local media in Pakistan reported that Munir’s visit had been arranged weeks in advance. Analysts say the rare top-level contact underscores how the US wants to maintain strategic leverage in a region shaped by the rivalries of three nuclear powers — China, India and Pakistan — and rising instability in the Middle East.


Pakistan secures $1 billion in ADB-backed financing from Middle Eastern banks

Updated 18 June 2025
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Pakistan secures $1 billion in ADB-backed financing from Middle Eastern banks

  • The loan aims to strengthen the country’s fiscal resilience, support reform momentum
  • The government says the deal signals renewed trust in Pakistan’s economic trajectory

KARACHI: Pakistan has signed a $1 billion syndicated term finance facility backed by Middle Eastern banks, marking its return to the region’s financial markets after more than two years, the finance ministry said on Wednesday.
The five-year facility is partially guaranteed by the Asian Development Bank (ADB) under its Policy-Based Guarantee program, which is linked to fiscal reforms undertaken by Pakistan to improve resource mobilization and economic stability.
The financing by the Middle Eastern banks is structured across Islamic and conventional tranches, with 89 percent of the total amount raised through a Shariah-compliant facility.
“This is a landmark transaction for the Government of Pakistan that demonstrates strong support from leading financiers in the region,” the finance ministry said in a statement.
It informed that Dubai Islamic Bank acted as the sole Islamic global coordinator, while Standard Chartered Bank served as mandated lead arranger and bookrunner.
Other financiers include Abu Dhabi Islamic Bank as mandated lead arranger, and Sharjah Islamic Bank, Ajman Bank and Pakistan’s Habib Bank Limited (HBL) as arrangers.
The deal marks the first time a facility has been backed by an ADB Policy-Based Guarantee linked to specific reform measures undertaken by a member country.
According to the ministry, the ADB’s support helped Pakistan attract significant interest from regional lenders and re-enter global capital markets at a critical time for the economy.
The government said the success of the transaction signals renewed trust in Pakistan’s fiscal outlook and macroeconomic trajectory, marking the beginning of a new partnership with Middle Eastern banks.
Pakistan, which has faced persistent external financing gaps in recent years, has relied on friendly nations and global lenders to stabilize its balance of payments and rebuild investor confidence.
The ADB-backed facility is intended to help strengthen fiscal resilience while supporting economic reform momentum.


Pakistan reports first Congo virus death of 2025 in Karachi

Updated 18 June 2025
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Pakistan reports first Congo virus death of 2025 in Karachi

  • Virus is transmitted through tick bites or direct contact with blood of infected animals
  • Pakistan’s southwestern province of Balochistan reported 23 Congo virus cases in 2024

KARACHI: A 42-year-old man lost his life after contracting the Crimean-Congo Hemorrhagic Fever (CCHF), marking the first confirmed fatality from the virus in Pakistan’s southern Sindh province this year, the health department said on Wednesday.

The fatality rate for the Congo virus ranges from 10 percent to 40 percent, depending on the quality of health care, timeliness of treatment and the patient’s overall health, according to the World Health Organization.

The virus, which is endemic in parts of Africa, Europe and Asia, is primarily transmitted through tick bites or contact with the blood or tissues of infected animals.

“First case of Congo virus [has been] reported in Sindh,” the Sindh Health Department said in a statement on Wednesday.

“42-year-old male was a resident of District Malir,” it continued. “The test report came out positive on June 16 and the patient passed away on June 17.”

Pakistan’s southwestern Balochistan province reported 23 Congo virus cases in 2024, with five deaths since January last year.

Local medical practitioners said most cases were diagnosed during the summer, when the likelihood of the virus spreading increases, particularly around the Eid Al-Adha festival.

The Islamic holiday, marked by the mass slaughter of animals, typically leads to greater human-animal interaction and exposure to infected livestock.

Pakistan witnessed its first case of Congo virus in 1976 and remained a major victim for years, according to the National Library of Medicine.

The country faces major challenges in combating Congo virus every year due to its specific geographical position and a majority of the population being involved with animal husbandry, it added.

There is no approved vaccine for its prevention.

The European Medicines Agency in May 2024 approved a Phase I clinical trial in Sweden for a DNA-based vaccine candidate, N-pVAX1, targeting the Congo virus.

Separately, the University of Oxford in August 2023 launched a Phase I trial of its ChAdOx2 CCHF vaccine, based on the Oxford/AstraZeneca Covid-19 platform, to assess safety and immune response.


Pakistan rescues injured Indian sailor amid post-war tensions with New Delhi

Updated 18 June 2025
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Pakistan rescues injured Indian sailor amid post-war tensions with New Delhi

  • Pakistan evacuates the injured sailor from a Liberian-flagged tanker with an all-Indian crew
  • Rare humanitarian gesture follows recent Pakistan-India war amid strained diplomatic ties

ISLAMABAD: Pakistan on Wednesday evacuated an injured Indian sailor from an oil tanker in the Arabian Sea, in a rare humanitarian gesture weeks after the two countries fought a brief four-day war that further strained already tense relations.

The medical evacuation was coordinated by the Pakistan Navy’s Joint Maritime Information and Coordination Center (JMICC), which received a distress call from the Liberian-flagged oil and chemical tanker MT HIGH LEADER, carrying an all-Indian crew.

The Pakistan Maritime Security Agency (PMSA) deployed a vessel and transferred the injured crew member to a hospital in Karachi for emergency treatment.

“The successful medical evacuation is yet another testament to the operational readiness and responsiveness of Pakistan’s maritime safety apparatus,” the Pakistan Navy said in a statement.

“The swift execution reflects Pakistan Navy’s resolve to fulfill its international obligations for the safety of life at sea, irrespective of the nationality of the seafarers involved,” it added.

The incident comes at a time of high diplomatic friction between the two nuclear-armed neighbors.

Last month’s military confrontation, involving missile, drone and artillery exchanges, marked one of the most serious escalations in recent years.

Pakistan has repeatedly called for the revival of a composite dialogue process to resolve long-standing issues, including the Kashmir dispute, cross-border militancy and a water-sharing arrangement under the Indus Waters Treaty.

India, however, has resisted any engagement so far.

The JMICC, which coordinated the evacuation, serves as Pakistan’s central maritime emergency response hub and regularly liaises with both national and international stakeholders.


Pakistan reduces sales tax on imported solar panels from 18% to 10% amid parliamentary pushback

Updated 19 June 2025
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Pakistan reduces sales tax on imported solar panels from 18% to 10% amid parliamentary pushback

  • The government proposed 18% GST on imported solar panels during budget 2025-26
  • Pakistan imported 17 gigawatts of solar panels in 2024, twice the previous year’s volume

ISLAMABAD: Pakistan’s Deputy Prime Minister Ishaq Dar on Wednesday said the general sales tax (GST) on imported solar panels had been reduced from 18% to 10% for the current year, following concerns raised by a parliamentary finance body.

The Senate Standing Committee on Finance and Revenue had urged the government a day earlier to withdraw the proposed 18% GST on imported solar panels, noting that some stakeholders had begun stockpiling equipment ahead of the federal budget to avoid the new levy.

The country’s proposed federal budget for the 2025-26 fiscal year included an 18% GST on the import and local supply of solar panels and related equipment, prompting concern from industry stakeholders and clean energy advocates.

Pakistan imported 17 gigawatts (GW) of solar panels in 2024, twice the volume recorded the year before, to meet rising consumer demand, according to the Global Electricity Review 2025.

“The 18 percent on top of 46% was an additional burden,” Dar told the National Assembly.

“So, regarding this, after consultations and deliberations, we have decided that this year we will keep a 10% sales tax and not 18%.”

Dar highlighted how this was the most debated subject after the budget was announced.

He also explained that around 46% of components used in solar installations in Pakistan were imported while the remaining 54% including inverters and other equipment were locally sourced and already subject to standard taxation.

Solar energy has supplied 25% of Pakistan’s grid electricity so far this year, placing the country among fewer than 20 globally that generate at least a quarter of their monthly power from solar farms.

Industry stakeholders and clean energy activists had warned that the added cost in tax could slow the rapid adoption of rooftop solar systems by households and businesses, potentially undermining national targets for expanding the share of renewables in the country’s energy mix.

Pakistan increased its solar electricity generation at a rate more than three times the global average in 2025, driven by a surge in solar capacity imports that were over five times higher than in 2022, according to data from Ember, a UK-based energy think tank.

This rapid growth in both capacity and output has propelled solar energy from being the country’s fifth-largest power source in 2023 to the top spot in 2025.