Remittances numbers announced recently have been disappointing. They might have posted a growth of around 4 percent year-on-year in November-23, but the gradual upward trend has taken a hit and the inflows have slipped by 9 percent on a month-on-month basis in Nov-23. Not only that, the monthly remittances inflows have remained below $2500 mark during the five months of FY24. Cumulatively as well, the remittances in 5MFY24 were around $11 billion - lower by 10 percent year-on-year versus similar period of FY23.
The decline in remittances inhas been due to weak economy at home as well as abroad. The decline in remittances in November-23 was also due to weakness in global economy and the volatility in the exchange rates. the month of November witnessed a depreciation of PKR again in the first half, which affected the inflows during the month. This once again gave rise to the Hundi/Hawala practice in the currency market, which led to a gap in the interbank and open market rates once again.
The country has been facing difficulty in improving the foreign exchange reserves while also trying to restrict the current account deficit. And the outlook is not any better for the coming months. The IMF has projected that the country’s remittances will stand around $29.4 billion, which is a decline of $3.5 billion – mostly due to the adverse effects of the economic downturn. The IMF has also intimated that the country’s oil imports will rise by over $2 billion, putting a pressure on the balance of payments and the forex reserves further!
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