Remittances hold a crucial place in Pakistan’s economy. So crucial that the remittances in Pakistan have been supporting the growth in foreign currency to pay for imports and external debt. Ideally, the remittances from Overseas Pakistani workers should fuel consumption and boost economic resilience in the country; but in the current precarious economy, the minimum requirement is for it to continue support the external account and the foreign currency to finance debts and imports.
For the nine months of FY24 (9MFY24), remittances were seen growing by 0.9 percent year-on-year as per the latest data from the central bank. The State Bank of Pakistan shows that remittances in 9MFY24 stood at $21.4 billion. Though the growth in remittances for 9MFY24 was less than one percent, it has been appreciated by the market after a weak 1HFY24 with growth witnessed over the last three months (3QFY24)
Data from SBP shows that remittances in March stood at over $2.95 billion, up by over 16 percent year-on-year. The month-on-month growth was over 31 percent. Remittance inflows in March-24 were the highest since April 2022.
The rise in remittances in March in particular has primarily been due to the Ramazan effect. Remittances spike during the holy month due to the zakat payments sent home to charitable institutions as well as Ramadan and Eid expenses and allowances sent to families from overseas Pakistanis. Historical trend suggests that remittances growth during Ramazan and the two Eid months. The same phenomenon was witnessed on March 24.
Overall, in 9MFY24, another trend witnessed was in the country-wise breakdown of remittances. Where most host countries showed negative growth in inflows in 9MFY23, most countries posted growth in remittance inflows during 9MFY24. Saudi Arabia continued to be the country with Overseas Pakistanis sending the most remittances followed by the UAE, the UK and the US.
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