Remittances to Pakistan for January 2024 were seen rising by 26 percent year-on-year and by less than a percent versus December 2023 – as per the latest data shared by the central bank on its website. The rise in remittances in January and the previous few months on a year-on-year analysis has primarily been due to the crackdown taking place on illegal and informal channels that took up drastically due to the volatility of the exchange rate and the widening gap between the interbank and open market rates.
The country-wise breakup shows that the remittances inflow largely saw year-on-year growth in Saudi Arabia, UAE, and the EU with Saudi Arabia contributing to 24 percent of the total remittance in Jan-24 and year-on-year growth of 43 percent.
However, the overall situation continued to post a declining trend with 7MFY24 remittances falling by three percent year-on-year with flows from the USA UK, and EU countries showing positive year-on-year growth while all others posted negative growth (see table).
Despite the monthly increase in remittances over the past few months due to the crackdown on Hundi and Hawala, the decline in overall remittances has puzzled many. This is especially because there has been a significant rise in people leaving the country, which should technically mean a rise in the money sent back home despite the economic challenges abroad. This rise in emigration and not an equivalent increase in remittances is at times tied to the concept of the decline in conventional remittances and the rise of unconventional means like blockchain technology. How much of the remittances are actually diverted to the alternate technology will be explored later in this space.
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