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Due to the Ramadan factor, the remittances sent by overseas Pakistani workers grew 27.4 per cent month-on-month in March, but the country lost $2.5 billion in the first nine months of FY23 due to an artificial exchange rate cap.
The State Bank of Pakistan (SBP) reported on Monday that remittances rose to $2.5 billion in March against $1.9 billion in February. However, the inflows dipped 10.71 per cent when compared with the $2.8 billion the country received in March last year, reports Dawn.
Bankers and currency dealers were expecting higher remittances as overseas Pakistanis used to remit more in the holy month for their families and also for charity purposes including Zakat.
The country’s currency dealers said remittances usually increase in the range of 15 to 20 per cent during the fasting month.
“With the cumulative inflow of $20.5 billion during the first nine months of FY23, the remittances recorded a decline of $2.491 billion when compared with $23.018 billion remitted during the same period last year,” Pakistan’s central bank data showed.
However, the most significant part of the data was a 10.8 per cent or $2.5 billion decline in remittances during the July-March period of the current fiscal year, while the country’s economic managers are struggling to revive the $7 billion International Monetary Fund programme for securing the release of $1.1 billion tranche.
The Pakistan government has met all the prior conditions, but IMF is still not ready to release the tranche. The Fund now wants written assurances from friendly countries for financing Pakistan’s external debt repayment gap for FY23.
On Thursday, Pakistan’s Minister of State for Finance & Revenue Dr Aisha Ghaus Pasha announced that Saudi Arabia had conveyed its commitment to the IMF for its bilateral financial support to Pakistan.
She hoped similar assurances from the UAE or some other source would help reach a staff-level agreement (SLA) with the Fund which would unlock multilateral disbursements.
The currency experts had been warning the government to remove the unreal dollar cap as the grey market was offering Rs 30-40 per dollar higher prices than the interbank and open markets rates. The financial market believes this wide rate gap encouraged the diversion of $2.5 billion remittances to illegal channels.
The government finally uncapped the exchange rate at the end of January which appreciated the dollar abnormally high against PKR but the inflows of both the remittances and export proceeds increased substantially since then.
The highest decline in remittances was noted from Saudi Arabia as it fell by $918 million (15.7 per cent) to $4.910 billion during the July-March period against $5.828 billion in the same period last fiscal year.
Except for the United States, the remittances from all destinations declined during the period under review. The inflows from the US increased by 3.2 per cent to $2.28 billion.
Overseas Pakistanis based in UAE and UK remitted $3.604 billion and $3.053 billion, posting a decline of 16 per cent and 4.4 per cent respectively. Despite a decline of 9.5 per cent, Pakistan received $2.417 billion from GCC countries.
The inflows from the EU countries declined by 6.9 per cent to $2.334 billion but the inflows during the last 5 years have been increasing from EU countries.
