Remittances surge by 10.7 percent to $30.3 billion in FY2023-24

Growth in remittances would improve current account balance

ISLAMABAD    -  Remittances sent home by overseas workers increased by 10.7 percent to $30.3 billion in the fiscal year 2023-24 (FY24). According to the latest data of State Bank of Pakistan, remittances increased to $30.25 billion in fiscal year 2023-24 (FY24) compared to inflows of $27.3 billion registered in the previous fiscal year. The inflows showed 10.7 percent increase mainly due to a surge in the use of legal channels for fund transfers.

However, on a month-on-month basis, inflows eased 3 percent to $3.16 billion in June 2024 from $3.24 billion in May 2024, but year-on-year swelled 44% from $2.2 billion registered in the same month a year ago. This improvement can be attributed to the fact that more people sent home funds through official channels like banks and exchange companies due to a stable currency. This shift is mainly a result of a crackdown on illegal dollar activity, dollar speculators, and money changers.

Overseas Pakistanis in Saudi Arabia sent home the largest amount in June 2024, with $808.6 million sent during the month. This amount was 1% lower than the previous month but 57% higher than the $516.1 million sent in the same month last year. Inflows from the United Arab Emirates (UAE) also dropped by 2% from $668.4 million in May to $654.3 million in June. However, compared to the same month last year, remittances increased by 101%, up from $324.8 million. Remittances from the United Kingdom totaled $487.4 million in June, a 3% increase from $473 million in May 2024. Meanwhile, remittances from the European Union fell nearly 3% month-on-month to $330 million in June 2024. Overseas Pakistanis in the US sent $322.1 million in June 2024, a 10% decrease from the previous month.

The growth in remittances would improve the current account balance. In May 2024, the current account showed deviation from its trend observed in previous months – deficit of $ 270 million. Imports of goods and services increased significantly by 25.3 and 12.2 percent on YoY and MoM basis, respectively. Similarly, exports of goods and services posted an expansion of 15.4 and 12.7 percent on YoY and MoM basis, respectively. Resultantly, strong expansion in imports has diluted the export growth – the trade deficit increased by 45.9 and 11.4 percent on YoY and MoM basis, respectively. Another factor that causes the current account deficit is primary income debit of $ 1.5 billion ($ 646 million in April 2024). On the other hand, workers remittances increased by 15.3 percent on MoM basis - contributed significantly and saving the current account from a large deficit. It is expected that current account will end within sustainable limits.

Ibrahim Amin, Chairman of Dellsons Associates, a financial consulting firm, said that growth in remittance inflows is instrumental to Pakistan’s economy, as it plays a crucial role in bridging the country’s current account deficit. He mentioned that Roshan Digital Accounts (RDA) played an important role in maintaining inflows through channels, in addition to the government incentives to banking institutions. He outlined the importance of streamlining banking channels and introducing an App through collaborations with banks and technology providers to facilitate overseas Pakistanis in different countries, mainly in the GCC region. The government, through embassies and consulates, should work to build the confidence of the labour class and semiskilled workers by incentives to attract remittances through banking channels.

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