KARACHI: Remittances being sent by overseas Pakistanis fell by 29.2 per cent in April compared to April 2022 while it declined by 13pc during the first 10 months of the current fiscal year.
The State Bank of Pakistan reported on Wednesday that Pakistan received $2.21 billion in April against $3.124bn in the same month last year showing a decline of 29.2pc while dipped by 12.8pc when compared with $2.536bn sent in March.
The decline in April disappointed market experts who were expecting improved remittances due to Ramazan-related higher inflows.
During the holy month, 15 to 20pc higher remittances are normal for the country but it was shocking particularly when Pakistan needs dollars to avert a default-like situation.
Pakistan lost $3.4bn in 10 months due to exchange rate issues
The remittances declined by $3.4bn or 13pc to $22.741bn during July-April FY23 compared to $26.143bn in the same period last year.
The loss of $3.4bn is much higher than the amount Pakistan has been begging from IMF for the last eight months despite fulfilling all preconditions the $1.1bn tranche has yet not been released.
After the arrest of Imran Khan, the political crisis has deepened which could further delay the IMF loan. Researchers and financial sector experts believe that the IMF and friendly countries have been asking the PDM government to bring political stability crucial to restore the confidence of the international community to help it steer the economy back on the right path.
The persistent instability has badly hit the trading and industrial activities across the country as a result the economy is forecast to hardly grow by less than half a per cent during the current fiscal year.
The details showed that Pakistan received the highest amount of $5.4bn from Saudi Arabia in July-April 2022-23 against $6.53bn in the same period last year, recording a decline of $1.1bn or 17.3pc.
The second highest amount of $3.987bn was received from the UAE which also dipped by 18.8pc or $925m. Inflows from the United Kingdom fell by 7.2pc to $3.411bn.
The only meagre increase of 0.2pc in the remittances was from the US to $2.5bn during the 10 months.
The inflows from GCC countries fell by 12pc to $2.666bn compared to $3.029bn last year. The inflows from the European Union also declined by 7.7pc to $2.59bn during 10MFY23.
Currency dealers said that the country lost $3.4bn in remittances only because of the increasing business of hawala system (grey market). Since the importers are unable to open letters of credit for raw materials, they have to buy dollars from the grey market despite very high rates. The grey market rate was Rs310 per dollar on Tuesday which sharply increased to Rs320 on Wednesday due to a sudden increase in the dollar rates in Pakistan.
“The overseas Pakistanis are getting Rs27 to Rs28 per dollar higher through the hundi system. It yields much higher money compared to banking market or exchange companies,” said a currency dealer.
Published in Dawn, May 11th, 2023