Remittances surge to record $3.2bn in May

Published June 8, 2024
A graph depicting year-wise inflows from overseas Pakistanis.— Rehan Ahmed
A graph depicting year-wise inflows from overseas Pakistanis.— Rehan Ahmed

KARACHI: The country received the highest-ever monthly remittances of $3.24 billion in May, an increase of 54 per cent compared to $2.1bn inflows in the same month last year, sparking optimism for a robust fiscal year.

According to data released by the State Bank on Friday, the May inflows were also 15.3pc higher than April’s $2.8bn.

This rebound is particularly notable following a $4bn shortfall in remittances during the previous fiscal year (FY23). As of the July-May period of the current fiscal year, total remittances have reached $27.09bn, around 8pc higher than a year ago.

If June maintains May’s performance, this could result in the second-highest annual remittances in Pakistan’s history compared to the record $31.28bn inflows in FY22.

Inflows rose 8pc to $27bn in first 11 months of FY24

Financial experts attribute the surge partly to the timing of Eidul Azha, as remittance inflows typically spike during the two Eid festivals.

However, other factors such as a stable exchange rate, anticipated foreign investments and a buoyant equity market, also contribute to this positive trend.

It was also observed that due to a steep fall in property prices, remittances have partially diverted towards this sector. Financial experts said that if real sector activities increase, more remittances could come for investment.

Pakistan depends more on remittances than exports, which remained lower than the remittances in most of the last five years.

The inflows would help the government more this year since the current account deficit in the first 10 months (July to April) of the current fiscal year is just around $200 million. The government expects a CAD of around $1bn by the end of the year.

The remittances will also help the government reduce the trade deficit and save surplus for debt servicing. The country is estimated to pay about $25bn as debt servicing in the next fiscal year (FY25).

The data shows that the highest inflow was noted from Saudi Arabia, as the remittances during July-May were $6.615bn, a growth of 10pc compared to last year.

Remittances from the UAE increased 12.7pc to $4.88bn during 11 months of this fiscal year, the highest growth compared to all other countries or destinations. However, inflows from the GCC countries declined 1.6pc to $2.879bn during this period.

Other big inflows were from the UK, which grew by 8.2pc to reach $4.034bn during 11 months. The inflows from European Union countries were almost equal to those from the United States.

The inflows from the EU noted a growth of 12.2pc to total remittances of $3.201bn, while the remittances from the US in the same period were $3.209bn, a growth of 10.9pc.

Published in Dawn, June 8th, 2024

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