Pakistan lost $3.7bn in remittances

KARACHI: The remittances sent by overseas Pakistani workers dipped month-on-month by 4 per cent and 10pc year-on-year to $2.1 billion in May.

The latest data released by SBP showed that the country lost $3.7 bn in remittances during the first 11 months of FY23 mainly due to a widening exchange rate gap.

The inflows tumbled by 12.98pc to $24.831bn in 11MFY23 compared to $28.489bn in the same period of last fiscal year. The country has been struggling hard to get a $1.1bn tranche from the IMF for a year but the shrinking inflows of remittances could make it more difficult for the country to manage the external account with poor foreign exchange reserves of less than $4bn.

Pakistan received $2.102bn in May compared to $2.198bn in April. It received $2.346bn in May last year.

At the same time, the State Bank permitted importers to arrange dollars for their imports. The importers rushed towards the grey market, further strengthening it, and remittances declined due to ever-increasing dollar rates in the grey market.

The most significant inflow was from Saudi Arabia but declined by 16.3 per cent to $5.924bn. The 2nd highest inflow was from UAE which was around $4.321bn, but it also showed a decline of 19.2 per cent.

The labour outflow from Pakistan shows a significant increase like the previous year, but the declining inflows indicate that the widening price gap of the dollar could be more problematic in the coming months. The dollar is officially available at Rs286-287 in the inter-bank market but the grey market offers up to Rs311-313 per dollar.