Remittances at two-year high during Ramazan

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KARACHI: The quantum of remittances increased to almost $3 billion in March, taking it to the highest level since April 2022, primarily due to Ramazan, according to the central bank’s data.

The total remittances in March stood at $2.95bn compared to $2.25bn in Feb, a month-on-month increase of 31.2pc. The year-on-year increase was 16.4pc, compared to the inflows of $2.54bn in March 2023.

This is the highest remittances inflow since April 2022, when overseas Pakistanis sent $3.12bn, as per the State Bank’s data.

The country-wise breakdown for March shows that the highest inflow was from Saudi Arabia at $70.31m, up from 54m in Feb. Inflows from the US stood at $37.25m, up from 28.74m in Feb. Similarly, overseas Pakistanis sent $54.85m from the UAE, up from $38.48m last month.

March inflows recorded at $2.95bn, highest since April 2022

The inflows from the UK were $46.15m, $30.27m from the Gulf Cooperation Council countries and $31.47m from the EU nations.

During the first nine months of FY24 (July-March), the year-on-year remittances quantum increased by 0.9pc despite slow inflows in the first half of the current fiscal year.

Total remittances during the nine months of this fiscal year were $21.04bn, up from $20.84bn in the same period last year.

Experts believe that higher inflows in March were because of Ramazan when inflows usually remained high due to charity and increased consumption.

The higher remittances inflows are helpful in reducing the current account deficit, stabilising the exchange rate and improving the overall confidence in the economic sector.

The remittances, which have already exceeded the revenue from export earnings, also help the State Bank in debt servicing, which is now considered the main threat to Pakistan’s economy.

The country would pay about $24bn in FY24, while $25bn would be required for debt servicing during the next fiscal year.

The remittances are higher than the country’s need for debt servicing, but the huge trade deficit eats up almost all inflows, forcing the government to borrow more money.According to Pakistan Bureau of Statistics data, the trade deficit widened year-on-year by 56.30pc to $2.17bn in March. However, the overall gap in the first nine months of the current fiscal year narrowed by 24.94pc to $17.03bn compared to $22.68bn in the corresponding period last year.

Published in Dawn, April 9th, 2024

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