New fiscal year of Pakistan begins with a sharp decline in remittances

New fiscal year begins with decline in remittances

Karachi: The State Bank of Pakistan has reported that foreign remittances from Pakistani workers have declined right from the beginning of the new fiscal year. Compared to the $2.5 billion remittance in July 2022, the August figures dropped by 19.3 per cent. On a month-on-month basis, the remittance decreased by 7.3 per cent (In June, the remittance reached at $2.187 billion).

The figures are alarming as the numbers for July are the lowest monthly reading recorded since February. Similarly, the last time an increase in remittance occurred on a year-on-year basis was in August 2022. In 2023, the remittance touched $27.03 billion (13.6 per cent lower than a year ago). 

The remittance is on constant decline despite Pakistan being in a continuous state of brain drain. Analysts said that political & economic uncertainty are the primary reasons for the situation. 

There is also a factor of the illegal market that occurred due to SBP policies and differences in prices of the dollar in interbank & open markets. SBP allowed arranging dollars to open letters of credit which pushed importers to buy dollars from the illegal market at Rs15 to Rs20 per dollar. Overseas Pakistanis got attracted to higher prices which dragged the remittances down by $4.25 billion. 

The highest amount of remittances Pakistan received was from Saudi Arabia ($486.7 million). The received amount is still 15.7 per cent lower in comparison to the previous year’s value. The overall country-wise decline was as follows:

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