Monthly remittances from overseas workers decreased 25.4% to $2.3 billion in May 2022 from a record high of $3.125 billion in April 2022, revealed data released by the State Bank of Pakistan (SBP) on Friday.
“At $2.3 billion in May 2022, workers' remittances have continued to remain above the $2 billion mark since June 2020,” the central bank said in a statement.
Remittances clock in at $3.125bn in April, highest in Pakistan's history
In terms of growth, remittances decreased by 25.4% on a month-on-month basis and 6.9% on year-on- year basis, largely reflecting the usual seasonal post Eid decline and associated long holiday.
On a monthly basis, the receipts were mainly sourced from Saudi Arabia ($542 million), United Arab Emirates ($435 million), United Kingdom ($354 million) and the United States of America ($233 million).
Cumulatively, at $28.4 billion, remittances have grown by 6.3% year-on- year during the first 11 months of FY22.
During this period, expatriates in Saudi Arabia sent the largest amount at $7.06 billion. It was followed by UAE with net remittances of $5.33 billion. The receipts from UK amounted to $4.03 billion while overseas Pakistanis in US sent $2.79 billion during the 11 months.
Alarm bells: SBP-held foreign exchange reserves fall to $9.23bn
Similarly, receipts from Gulf Cooperation Council (GCC) countries other than UAE and Saudi Arabia stood at $3.29 billion. Net remittances from EU countries amounted to $3.07 billion during July 2021 to May 2022.
The development comes at a crucial time for Pakistan, which has seen its foreign exchange reserves deplete due to external debt servicing and lower inflow of dollars. According to the latest data, reserves held by the SBP decreased another $366 million to $9.72 billion, said the central bank on Thursday, with the level staying at less than 1.5 months of import cover.
Earlier this month, the SBP, under its home remittances promotion measures, allowed Exchange Companies (ECs) to maintain separate foreign currency accounts for each Money Transfer Operator (MTO).
World Bank projects slowdown in remittances
In February, the government decided to provide an incentive of Re1 for each US dollar of home remittances surrendered in the inter-bank market provided that the ECs surrender 100% of the foreign exchange received as inward home remittances.
Meanwhile, the World Bank has projected a slowdown in remittances to Pakistan and estimated it to grow at 8% to $34 billion in 2022 compared to $31 billion in 2021, which grew at 20%.
The bank, in its report, 'Migration and Development Brief, A War in a Pandemic Implications of the Ukraine crisis and COVID-19 on global governance of migration and remittance flows', stated that the remittance outlook for South Asia in 2023 is highly uncertain. While high-frequency data for all countries except India show growth in remittances slowing in South Asia, it is unlikely that the strong growth in remittances in South Asia in 2020 and 2021 can be sustained through 2023.