By Shahid Iqbal
Published in DAWN on February 12, 2022
KARACHI: The remittances being sent by the overseas Pakistanis fell by 5 per cent year-on-year to $2.144 billion in January, showed data released by the State Bank of Pakistan (SBP) on Friday.
On month-on-month, the remittances depicted a fall of $376 million or 15pc. The workers’ remittances remained above the $2bn-mark for the 20th consecutive month, however.
If the falling trend persists in the remaining months of this fiscal year, it could pose serious problems for the economic managers as the government heavily relies on remittances, which are much higher than the country’s total export proceeds.
The remittances grew at a much slower rate of 9.1pc to $17.951bn in July-January 2021-22 over the same period last year when the growth was recorded at 24pc over the preceding period.
The government eyes over $30bn inflows from the overseas Pakistanis by end of FY22, which will help the country bridge the widening current account deficit already crossed $9bn in the July-December period of this fiscal year.
Inflows stay above $2bn mark for the 20th month running
The foreign exchange reserves of the SBP increased in the last week after the arrival of $1bn from the IMF and $1bn proceeds of Sukuk issuance on the international market.
However, the revelation of Finance Minister Shaukat Tarin that the country is bound to pay back the entire $3bn deposit made by Saudi Arabia in an SBP account at 4pc, could create more problems for Pakistan.
This amount would be paid in one go and within one year and an agreement to this effect was finalised in October 2021. This outflow of $3bn would further weaken the foreign exchange holdings of the SBP.
The details show that the highest amount of $4.579bn, an increase of just 1.5pc, was received from Saudi Arabia. In the same period of FY21, the remittances from the kingdom grew by 21.6pc.
The second biggest inflow was from the United Arab Emirates despite negative growth of 1.8pc to $3.382bn in 7MFY22 compared to $3.443bn in the same period of FY21 when it was grown by 6.3pc.
Other GCC countries remitted $2.061bn with a growth of 9.3pc compared to the same period of last fiscal year.
The other two important sources of remittances for Pakistan are the United Kingdom and the United States. The inflows from the two countries were $2.467bn and $1.701bn with the growth of 13.2pc and 21pc respectively. In the same period of FY21, the remittances from the UK and the US grew by 51pc and 45pc.
The inflows from the European Union increased by 32pc to $1.987bn in 7MFY22. The EU remittances witnessed a growth of 44pc in the same period of last fiscal year.
Within EU countries, inflows from Italy grew 51pc to $508m compared to the 49pc jump recorded in the same period of FY21.