KARACHI: For the first time, remittances crossed the figure of $3 billion in a month, which gave hope that the country would achieve its annual remittance target of $30bn.

The State Bank of Pakistan reported on Friday that the country received $3.1bn remittances for April, registering an increase of 12pc compared to the $2.79bn received in the same month of FY21.

The country is currently facing a serious shortage of dollars as the outflows for debt servicing and trade deficit have shattered the country’s reserves. Since August 2021, the State Bank’s foreign exchange reserves have fallen by half.

The only encouraging report on the external front of the economy is the rising remittances. During the last 10 months, July-April FY22, the remittances increased by 7.6pc compared to the same period of last year.

The country received a collective $26.1bn during the 10 months, very close to the expected target of $30bn for FY22. This is the country’s primary source of foreign exchange, as exports are expected to remain lower than total remittances despite a 25pc increase in exports this year.

The inflow of $2.8bn in March was also a historic high. On a month-to-month basis, the remittances increased by 11pc in April.

Throughout the current fiscal year FY22, the remittances remained above $2bn, and the monthly average is about 2.66bn. Despite these heavy inflows, the exchange rate could not be strengthened as the dollar kept appreciating on a daily basis.

The details of inflows showed that Pakistan received the highest amount of remittances from Saudi Arabia, which reached $6.517bn with a growth rate of 1.6pc. It did not show much growth, but the remittances were still the highest.

Similarly, the inflows from the UAE dropped by 3.6pc, but the remittances were the second highest with a total of $4.898bn. It shows the inflows from traditional destinations were not the same or slightly increased; in fact, the inflows from non-traditional sources increased significantly.

The inflows from the UK and USA increased to $3.671bn and $2.556bn, with a growth rate of 9.9pc and 20.4pc, respectively.

Non-GCC inflows increased by 9.5pc to $3.024bn, highlighting the country’s reliance on the Arab region.

However, among the non-traditional sources, EU countries made a significant contribution. Inflows from EU countries increased by 27pc year-on-year to $2.803bn. The inflows from Australia and Canada also showed significant improvement, with a growth rate of 28pc and 27pc, respectively. Pakistan received $637m from Australia and $591m from Canada.

Currency dealers said the higher remittances in April were also due to Ramazan and Eid, as overseas Pakistanis traditionally send higher amounts for their families and charity, including Zakat. Currency dealers estimate that 15 to 20pc of remittances increase due to Ramazan each year.

The inflows from the UK and USA increased to $3.671bn and $2.556bn with a growth rate of 9.9pc and 20.4pc respectively.

Inflows from non-GCC countries increased by 9.5pc to $3.024 billion, highlighting the importance of the Arab region to the country.

However, among the non-traditional sources, EU countries made a significant contribution. Inflows from EU countries increased at a 27pc annual rate to $2.803 billion. The inflows from Australia and Canada also showed significant improvement, with a growth rate of 28pc and 27pc, respectively. Pakistan received $637m from Australia and $591m from Canada.

Currency dealers said the higher remittances in April were also due to Ramazan and Eid, as overseas Pakistanis traditionally send higher amounts for their families and charity, including Zakat. Currency dealers estimate that 15 to 20pc of remittances increase due to Ramazan each year.

Published in Dawn, May 14th, 2022