Remittances for March-23 have posted a growth of over 27 percent month-on-month as per the recently announced data by the central bank. The rise in monthly remittances come after a weak period, touching $2.5 billion – the highest in seven months. The growth in remittances is after remittances have been continuously falling since August 2022 and only rising meagerly in February-23. However, on a year-on-year basis, remittances flows continue to weaken, falling by 11 percent in March-23 versus March-22.
Does this mean that the remittances are back uphill? The rise in remittances in March is due to the holy month of Ramzan and the upcoming Eid – ul – Fitr. Religious festivities are the time of the year when remittances growth is hefty as overseas Pakistanis send back home money to families and relatives for charity, Zakat, Qurbani (in case of Eid –ul – Azha) as well as personal use. This could be the highest monthly remittances for the year, which would come down in the following months again.
This can be seen in the month-on-month uptick in flows from all the major counties including USA, UK, Saudi Arabia, UAE, other GCC and the EU. Also, the recent uncapping of the exchange rate has given some boost to the remittances. Overall, the challenges of weaker remittances however remain the same. Previously, the drop in remittances over six to seven months had been mainly caused by currency fluctuations. The artificially cheap dollar price in the interbank market drove many to the unregulated black market. The use of hawala and hundi continued to provide better rates to senders as the large gap in interbank, open market, and illegal market rates for the dollar became a key reason behind declining remittances through legal channels.
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