KARACHI: Despite an upsurge in inflation that has pushed the cost of living across the globe in the post-Covid era, the overseas Pakistanis remitted a higher amount of $2.7 billion in August.

The State Bank of Pakistan (SBP) on Tuesday reported that the country received $2.724bn in August, a growth of almost eight per cent on a month-on-month basis. However, the amount was just 1.5pc higher when compared with $2.682bn in August 2021.

Besides, in July-August, remittances by overseas workers dropped 3.2pc to $5.247bn from $5.418bn a year ago.

Earlier, financial sector experts feared remittances might decline since the cost of living in the Middle East and Europe has gone sharply high, which may dent remittances from these regions, but healthy inflows in August rejected all such speculations.

Pakistan received record remittances of over $31bn in FY22, up 6.1pc over the preceding year.

However, the foreign direct investment (FDI) fell by 43.3pc in the first month of the current fiscal year. The country could receive just $58.9 million in FDI against $103.8m in July 2020.

The massive month-on-month decline of 45pc in the current account deficit (CAD) to $1.2bn in July was a good sign for the economy facing a severe shortage of dollar inflows.

The country needs much higher inflows of remittances in the current fiscal year as flash floods have devastated agriculture across the country, particularly in Sindh and Balochistan, which may hit textile exports due to damage to cotton while import of food will rise as major crops were badly hit.

The country’s exports were unprecedented in FY22 with record remittances but the CAD remained very high.

Almost all important destinations of overseas Pakistanis sending remittances noted a decline in the first two months of 2022-23.

The highest remittances were sent from Saudi Arabia, which recorded a decline of 7.5pc to $1.272bn in July-August.

Inflows from the UAE dipped 8.2pc to $987.6m in July-August compared to $1.075bn in the corresponding period last year.

Overseas Pakistanis in the UK and US sent $781m and 584.7m, which was higher by 3.2pc and 7.1pc, respectively, over the same period last year.

Other important inflows were $581m from the GCC and $569m from the EU countries. However, inflows from Europe were down by 4.5pc compared to a 50pc rise in the same period last year.

Published in Dawn, September 14th, 2022