Pakistan's remittances drop amid widening exchange rate gap

ISLAMABAD: Amid the widening exchange rate gap in the country, overseas Pakistanis sent home USD 2.2 billion in the month of October, a decrease of 9.1 per cent from the preceding month.

"In Oct 2022, workers' remittances recorded an inflow of USD 2.2 billion indicating a 9 per cent decrease over last month," the State Bank of Pakistan (SBP) said in a tweet, last week.

The workers' remittances recorded an inflow of USD 2.2 billion in October as compared to the previous month's figure of USD 2.4 billion, the central bank said in its official data last Friday.

With a cumulative inflow of USD 9.9 billion during the July-October period in the fiscal year of 2023, the remittances decreased by 8.6 per cent as compared to the same period last year, the figures showed.

Last month, the remittances mainly came from Saudi Arabia with USD 570.5 million, the UAE with USD 427 million, Britain with USD 278.8 million, and the US with USD 253.1 million, according to the bank.

Foreign remittances play a significant role in Pakistan's economy as they are one of the major sources of foreign exchange. Business Recorder reported that the balance of payments crisis is at its worst in Pakistan and the remittances are not helping.

According to the Pakistan financial daily, the remittances from overseas Pakistanis have been falling since the last three months. The decline in remittances has been attributed due to the recession in European and western countries.

Divergence of remittances to grey and illegal channel factors like hawala and hundi, is also a significant factor for weakening remittances.