Remittances in FY22

Pakistan received record remittances in FY22. According to State Bank of Pakistan (SBP), the country received $31.2 billion during the previous fiscal year – a growth of over 6 percent year-on-year and crossing the $30 billion mark for the first time. Compared to FY22, the previous year growth was much faster; remittances in FY21 stood around $29 billion, growing by around 27 percent year-on-year. However, the annual growth percentage of 6 percent in FY22 is of key importance as unlike other sectors, remittances did not grow from a low base; remittances have been on an upward trajectory over the last 15 years - barring a slight dip in FY17.

Though monthly remittances have experienced some slowdown in the last couple of months, remittances for June2022 remained above $ 2 billion mark as it did throughout the year and helped country cross the $30billion mark. Overseas Pakistanis remitted $2.761 billion in June-22, which was up by 1.7 percent year-on-year, and 18 percent month-on-month.

Despite the recent monthly slowdown (partly due to the seasonality factor), remittances have been growing phenomenally over the last two years primarily since the beginning of the global pandemic due to the incentives to formalize the payment channels as well as the global and country dynamics in terms of travel restrictions, money transfer, FATF efforts, layoffs and lockdowns, currency depreciation, and fiscal stimuli in the host and countries – which also continued in FY22.

In terms of share, the highest inflows came from overseas Pakistanis residing in Saudi Arabia. The gulf countries together – including Saudi Arabia – contributed towards 55 percent of total foreign inflows in FY22. However, the inflows from Saudi Arabia remained flattish during the year, which can also been in overall decline in the share of gulf countries that stood over58percent in FY21.

Growth in remittances has been phenomenal – from around a billion dollar in 2000 to over 30 billion dollars in 2022. But the growth in remittances has been more than matched by increasing external debt, which increased reliance in remittances much more with every passing year. This reliance will continue to be of prime importance in the coming months asother sources of inflows dry up.