KARACHI: Remittances grew 16 per cent in July on a year-on-year basis while inflows dropped 16.2pc over the preceding month.
The State Bank of Pakistan (SBP) reported on Thursday that the country received remittances of $1.54 billion in July against $1.33bn in the same month a year ago.
Inflows declined on a monthly basis, which indicates a downward trend following an improvement at the end of 2016-17. Remittances declined for the first time after 13 years in 2016-17.
Inflows grew 16pc on an annual basis
The latest drop in remittances can be alarming for the government, which is already under pressure because of a weakening external sector.
Remittances from the United States, United Kingdom and Saudi Arabia recorded an increase of 14pc, 38pc and 8pc, respectively, on a year-on-year basis. Inflows from these three countries amounted to $193m, $199m and $408m, respectively.
The highest remittances were from Saudi Arabia last month. Inflows from the United Arab Emirates increased 14pc to $334m.
In addition to remittances, foreign exchange reserves of the country are also in decline. A separate report by the SBP showed reserves of the central bank amounted to $14.4bn on Aug 4.
SBP reserves were $14.78bn in 2010-11. This indicates that the central bank’s reserves are presently below the level of 2010-11.
SBP reserves fell to their lowest level of $6bn in 2012-13. They started increasing from the next fiscal year and rose to the highest level of $18.93bn in October 2016. SBP reserves have lost $4.53bn since then.
Net reserves of commercial banks rose to $5.6bn in July from $4.8bn in January. Remittances are the key to the stability of the external sector, which saw a record current account deficit of $12bn in 2016-17.
Published in Dawn, August 11th, 2017