KARACHI: Remittances sent by overseas Pakistanis grew $255 million or 11.5 per cent to $2.5 billion in October when compared with $2.208bn in September, reported the State Bank of Pakistan (SBP) on Friday.

However, remittances posted a 9.6pc rise or $216m compared to $2.247bn in October 2022.

The country has been in dire need of receiving higher remittances as the inflows from other sources have dried up, particularly the export proceeds are on the decline. The economic managers fear that lower inflows could create serious current account imbalances. The softening of restrictions on imports has already created a larger trade deficit.

However, the most discouraging side of the remittances was the 13.3pc decline during July-Oct FY24 over the same period last year. Pakistan received $8.794bn during this period against $10.144bn in the same period last year.

The previous year proved highly discouraging since the overall remittances in FY23 fell by about $4bn compared to the preceding year. The four-month average is lower than last year which means the total inflows could also be lower than FY23 ($27.332bn received in FY23).

Four-month figure still 13pc lower YoY

The crackdown against illegal currency business and smuggling had created hope for higher inflows through official channels but September inflows were disappointing for the government.

Though the remittances hit the $2.5bn mark after March, the inflows declined from all destinations except EU countries.

The data showed that the largest decline was from the UAE as it fell by 21.2pc to $1.497bn during July-October FY24.

Inflows from Saudi Arabia, which is the biggest source of remittances, noted a decline of 15.7pc to $2.132bn during 4MFY24.

Remittances from the US and the United Kingdom witnessed an identical fall of 7pc to $1.051bn and $1.277bn, respectively, during 4MFY24. Inflows from GCC countries dipped by 13.2pc to $990m.

Only improvement was noted in the inflows from the EU countries which increased by 6.7pc to $1.141bn during the four months.

SBP reserves up

The foreign exchange reserves held by the SBP saw an uptick of $4m to $7.51bn during the week ended on Nov 3.

The central bank has been striving to keep the reserves close to $8bn as the country is negotiating for a second tranche under the $3bn Standby Arrangement with the IMF.

Bankers said the SBP is a regular buyer of dollars from the interbank market which is one of the reasons for shortage in the banking market.

The SBP said the total reserves of the country stood at $12.614bn including $5.1bn of the commercial banks.

Published in Dawn, November 11th, 2023