Inflow of overseas workers’ remittances registered an improvement to clock in at $2.2 billion in June 2023, an increase of 3.9% on a month-on-month basis when compared to $2.1 billion in May 2023, showed data released by the State Bank of Pakistan (SBP) on Monday.
On a yearly basis, the monthly inflow of remittances registered a decline of 22%, as they stood at $2.8 billion in the same month of the previous year, the data showed.
On a cumulative basis, the inflow of remittances during fiscal year 2022-23 stood at $27 billion, 13.6% lower than $31.3 billion in the same period of the previous fiscal year, a decline of over $4.25 billion.
Experts said the government’s decision to maintain the US dollar rate at 220 level last year, led to a rise in an informal grey market, which dented inflows towards the formal channels.
“During the year, a significant decline of remittance inflows came from Gulf countries,” said Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited.
“The decline was despite economic growth witnessed in these countries, as compared to Western countries. This shows that informal channels were boosted,” he added.
Rauf said the reduction in gap between interbank and informal markets would improve inflows.
“Remittances are expected to improve this fiscal, as the number of overseas Pakistanis has increased,” he added.
During the year, January and February 2023 were two months in which inflows were below $2 billion because of uncertainty in the currency market and massive difference in the exchange rate in the inter-bank and black market.
The unofficial cap on exchange rate was removed after which the exchange rate was raised to Rs 269 against a dollar as on Feb 13, 2023 compared to Rs 230 as on January 26, 2023.
With the improvement in the exchange rate, home remittances posted some growth. In addition, Ramazan and Eid inflows also helped to get higher inflows in March 2023.
Breakdown of remittances
Overseas Pakistanis in Saudi Arabia remitted the single largest amount in June 2023 as they sent $515.1 million during the month. However, this was nearly 24% lower than the $675.6 million sent by expatriates in the same month of the previous year.
Inflows from the United Arab Emirates (UAE) registered a significant decline of 35% as they decreased from $499.7 million in June 2022 to $324.7 million in June 2023.
Remittances from the United Kingdom amounted to $343 million during the month, a decline of 25% compared to $456.8 million in June 2022.
Moreover, remittances from the European Union decreased 3% as they amounted to $277.6 million in June 2023. Overseas Pakistanis in the US sent $272.3 million in June 2023, registering a year-on-year decline of 5%.