Remittances fall 12.3% in September 2022, amount to $2.4 billion

The inflow of remittances in Pakistan from foreign countries fell 12.3% in September 2022 on a year-on-year basis to $2.4 billion, owing to high base effect and resumption of post-Covid traveling.

According to the data released by the State Bank of Pakistan (SBP) on Tuesday, the inflow of remittances had stood at $2.78 billion in the same month of last year.

Talking to Business Recorder Tahir Abbas, Head of Research at Arif Habib Limited (AHL) said that the decline in remittances is in line with the ongoing trend.

“We expect the remittance inflows to maintain a status quo or decline by 1.5-2% in FY23, as not much growth will be witnessed due to high base effect,” he added.

However, it is expected that remittances will improve in October, said the analyst.

Tahir highlighted that the resumption of international travel also had an impact on remittance inflows.

“Moreover, the element of hawala and hundi is also there, but after the government’s recent measures against it, the remittance figure is expected to improve in the month of October,” he added.

Echoing his views, Pak-Kuwait Investment Company Head of Research Samiullah Tariq told Business Recorder that the decline in remittances was witnessed on the back of the restoration of traveling after nearly 2-year disruption in Covid.

“Moreover, inflation in foreign countries is at record high levels therefore disposable incomes have fallen significantly,” he said. “Due to this, people are able to send lower amounts of money back home.”

“Remittances had decreased from formal channels due to the large spread between the inter-bank and open market rate, which reached Rs10-12,” he said. “As the gap has reduced now, the remittances from formal channels have now increased.”

On a month-on-month basis, remittances fell 10.5% as they amounted to $2.72 billion in August 2022. On a cumulative basis, the inflow of remittances during the July to September quarter of the fiscal year 2022-23 stood at $7.7 billion which was 6.3% lower than $8.2 billion in the same period of the previous fiscal year.

Overseas Pakistanis in Saudi Arabia remitted the single largest amount in September 2022 as they sent $616.6 million during the month. This was 14.3% lower than the $719.5 million sent by expatriates in September 2021.

Remittances from the United Arab Emirates amounted to $474.3 million during the month, posting a decline of 9.7% compared to $525.3 million in the same month last year.

Inflows from the United Kingdom fell 19% as they declined from $380.3 million in September 2021 to $307.8 million in September 2022.

Remittances from the US rose 7.2% as they amounted to $268.1 million in September 2022. Overseas Pakistanis in the US sent $250.1 million in the same month last year.