In November 2023, remittances from overseas Pakistanis saw a decline of 8.6%, totalling $2.25 billion compared to the previous month’s inflow of $2.46 billion, as per data released by the State Bank of Pakistan (SBP) on Friday. However, on a year-on-year basis, November 2023 witnessed a 3.5% increase in inflows compared to the $2.17 billion recorded in November 2022.
Breaking down the numbers, the highest remittance inflows originated from Saudi Arabia, reaching $540 million, followed by the United Arab Emirates (UAE) at $409 million, the United Kingdom (UK) at $341.7 million, European Union (EU) countries at $268 million, and the United States (US) at $261.5 million. These regions have consistently been the largest contributors to Pakistan’s remittance inflows, reflecting the significant number of Pakistanis residing and working abroad, particularly in the Gulf and Western countries.
For the first five months (July-November) of the fiscal year 2023-24 (5MFY24), remittances amounted to $11.04 billion, reflecting a 10% decrease compared to the $12.31 billion recorded during the same period in the previous fiscal year. Additionally, remittances were down nearly 17% in 5MFY24 compared to the corresponding period in FY22. The overall decline in remittances could be attributed to a variety of factors, including global economic challenges, tightening financial conditions, and exchange rate fluctuations that have affected the volume of transfers.
The decrease in remittances during the first few months of FY24 poses a challenge to Pakistan’s foreign exchange reserves, which rely heavily on remittance inflows to stabilize the economy. Analysts suggest that the government and the SBP may need to implement measures to encourage higher remittance flows, such as offering incentives for using formal remittance channels or enhancing the ease of money transfers. Despite the decline, the year-on-year increase in November provides a glimmer of hope that the remittance trend could improve toward the end of the fiscal year.
