KARACHI: Monthly inflows of home remittances reached below the $2 billion mark in January 2023 for the first time in 31 months due to exchange rate volatility. The inflows of workers’ remittances continued to witness the downward trend since August 2022 and declined by 13 percent in January 2023 compared to the same period of last year.
The State Bank of Pakistan (SBP) on Monday reported that the country received home remittance inflows amounting to $1.9 billion in January 2023 against $2.18 billion in January 2022, depicting a decline of $ 286 million in a month.
Pakistan was receiving over $2 billion monthly inflows since June 2020 and it crossed the mark of $3 billion in April 2022. However, now after a gap of 31 months, monthly inflows reached below $2 billion in January 2023 because of uncertainty in the currency market and massive difference in the exchange rate in the interbank market and black market.
The SBP has addressed this issue in the last week of February and under the free-market mechanism policy the exchange rate has risen to Rs 269 against a dollar as on Feb 13, 2023 compared to Rs 230 as on January 26, 2023. With the improvement in the exchange rate, home remittances in February 2023 are likely to post some growth. In addition, the Ramzan and Eid inflows will also help to witness some increase in the inflows of home remittances this month.
Remittances down 19% year-on-year, clock in at $2.04bn in December
Worker’s remittances arrived in January 2023 are also some 10 percent or $208 million lower than December 2022, in which some $ 2.102 billion remittances were received.
According to SBP, cumulative inflow of workers’ remittances also registered an 11 percent decline in the first seven months of this fiscal year (FY23). Overall home remittances inflows stood at $ 16 billion during July-Jan of FY23 compared to $ 18 billion in the same period of last fiscal year (FY22), showing a decline of $2 billion.
All major leading corridors except the US witnessed negative growth during the first seven months of this fiscal year. Inflows from Saudi Arabia fell by 15.1 percent to $ 3.9 billion during July-Jan of FY23. Despite the decline in inflows, Saudi Arabia is the largest contributor in overall inflows with 24 percent share.
During the period under review, remittances from the UK fell by 6.4 percent to $2.3 billion, UAE 15.2 percent to $2.8 billion, GCC countries 9 percent to $1.8 billion and inflows from EU countries fell by 10 percent to $1.7 billion. However, home remittances from the US rose 2.8 percent to $1.7 billion in the first seven months of FY23.
On month-on-month basis, remittance inflows during Jan 23 were mainly sourced from Saudi Arabia $407.6 million, United Arab Emirates $269.2 million, United Kingdom worth $330.4 million and United States of America amounted to $213.9 million.
Copyright Business Recorder, 2023