ISLAMABAD: Remittances sent home by overseas Pakistanis declined by 12.8 percent year-on-year to $24.8bn in 11 months of the current fiscal year, the data by the State Bank of Pakistan (SBP) showed.
The SBP data showed that the remittances decreased 10.4 percent year-on-year to $2.1 bn in May. These inflows saw a 4.4 percent month-on-month decline. In April, Pakistani expatriates sent $2.2 billion home.
It is to mention here that inflows during the month under review were mainly sourced from Kingdom of Saudi Arabia ($524 million), United States of America ($257.2 million), United Kingdom ($306.5 million) and United Arab Emirates ($335.8 million).
Analysts attribute the decrease in remittances between July 2022 and May 2023 to economic slowdown in host countries, higher inflation, foreign currency cash transfer by overseas Pakistanis and interlude exchange rate adjustment.
Furthermore, more overseas Pakistani workers opt for illegal means to send money home as the interbank-open markets exchange rates difference widened. As a result, for a few months, the dollar rate was better in the grey market, where the workers’ remittances were shifted.
The declining trend in remittance inflows is not good for the country, which is dealing with a foreign exchange shortage and a delay in the bailout loans from the global lender.
The total debt requirements for the fiscal year 2023-24 will amount to approximately $23bn, according to the State Bank of Pakistan, which will be evenly distributed across four quarters. In the next monetary policy statement, the central bank will come up with how to fund this depending upon IMF and other factors.
Fallen remittances are not good for the country’s balance of payments. Moreover, the country’s exports fell by 12 percent in July-May to $23.2bn mostly due to weak global demand and lackluster performance in the domestic economy amid demand-curtailing measures.
