The amount of money sent home by overseas Pakistanis in March reached $2.5 billion, which is a seven-month high, according to data from the State Bank of Pakistan (SBP). The increase in remittances is believed to be due to the approaching Ramadan and Eid ul Fitr. Although the inflow of workers’ remittances in March was 27% higher than in February, it was still 11% lower than in March 2022.
In March 23, remittances totaled $2.5 billion, with a 27.4% increase from the previous month and a 10.7% decrease from the previous year. Cumulative inflow during the first nine months of FY23 was $20.5 billion, down 10.8% from the same period last year.
Furthermore, it has been observed that non-resident Pakistanis are using legal channels to send money to their families due to the diminishing gap between rates in the interbank and open market. This increase in remittances is being considered as a positive development, as the difference between the kerb and interbank rates is minimal.
The inflow of remittances is the highest it has been in the past seven months, and this can be attributed to Ramadan starting earlier this year than last year. Historical trends suggest that overseas Pakistanis tend to send record-high remittances ahead of Eid festivals every year.
The monthly increase in remittances can also be attributed to the Ramadan factor, which usually results in higher flows due to family commitments, welfare, charity, etc. The inflows in the upcoming months are expected to remain elevated due to another Eid (Eid ul Adha) falling at the end of this fiscal year.
The Ministry of Finance has projected that the remittances will continue to improve due to the positive seasonal and Ramadan factors. However, the State Bank of Pakistan, in its monthly remittance bulletin, stated that despite the cumulative inflow of $20.5 billion during the first nine months of the fiscal year 2022-23, the remittances decreased by 10.8% compared to the same period last year.
It is worth noting that this month’s remittances have exceeded the Pakistan Bureau of Statistics (PBS) trade deficit data by a significant margin, increasing the possibility of a current account surplus.
It is important to note that the State Bank of Pakistan’s trade deficit data point is typically even lower than the Pakistan Bureau of Statistics’ trade deficit.
The Ministry of Finance, in its monthly outlook report, has mentioned that the current account deficit is likely to remain on the lower side, considering the economic factors contributing to the figures.
Pakistan is currently at risk of defaulting on its debt, as the International Monetary Fund (IMF) bailout program has been stalled since November. Additionally, a heated political battle is underway between the government and former Prime Minister Imran Khan.
Given its foreign exchange reserves hovering around $4.2 billion, which is only sufficient for one month of import, the cash-strapped nation is in dire need of funds.
Main sources of remittances were Saudi Arabia, United Arab Emirates, United Kingdom, and the United States of America.
Pakistanis residing in Saudi Arabia remitted the largest amount of $563.9 million in March. However, it was 24.04% lower than the $454.6 million received in February.
Expatriates in the UAE sent home 25.52% more amount as receipts increased from $406.7 million to $324 million.
Remittances from overseas Pakistanis in the UK increased 33.12% to $422 million. They sent $317 million in February.
Moreover, remittances from other Gulf Cooperation Council (GCC) countries decreased by 10.33% to $297.6 million and a 21.72% increase was recorded in inflows from European countries, which clocked in at $298.6 million in the month under review compared to February.