August remittances reach $2.7bn following 8% rise

• Remittances rise by 1.5% (year-on-year) to $2.7 billion in August.
• This was 27th successive month in which receipts remained above $2bn.
• Saudi Arabia remains most significant contributor.

KARACHI: The remittances sent home by overseas Pakistanis rose 8% month-on-month to $2.7 billion in August 2022, the latest data from the central bank showed Tuesday.

The nominal increase in remittances came following the normalisation of the number of working days in month that led to a decline in July.

According to the State Bank of Pakistan (SBP), the remittances sent home by overseas Pakistanis rose by 7.9% (month-on-month) and 1.5% (year-on-year) to $2.7 billion in August.

Pakistan registered a nominal growth in August because July was disastrous for the country as the remittances registered a sharp fall of 8% due to fewer working days on account of Eidul Adha.

It should be noted that this was the 27th successive month in which receipts remained above the $2 billion threshold.

The inflow of remittances decreased 3% year-on-year to $5.25 billion in the first two months of the current fiscal year 2022-23.

“Pakistan's remittances are a major source of financing the burgeoning trade gap,” former advisor to Finance Ministry Dr Khaqan Najeeb said while speaking to Geo.tv.

He further added that it was “heartening” to see workers’ remittances rising to $2.72 billion, up 7.9% compared to July and a minor uptick of 1.5% compared to the same month of last year.

However, Dr Najeeb stated that it was important to remember that July-August remittances are 3.2% lower compared to the same period of last year.

“A trend that the authorities must consider and strengthen Pakistan Remittance Initiative, ensure smooth and quick flows of funds and most importantly keep an eye on the difference of interbank and open market rupee rate,” he said.

The former adviser maintained that a large difference in the two rates can influence behaviour to use informal channels, “something the country can’t afford.”

It should be noted that the dwindling rupee, however, might impact higher remittances as expats look for better conversion rates which means that they would have to send more money to send home the same amounts in rupee terms.

The government and central bank's recent permission for currency exchanges to disburse remittances may also boost the numbers, as it may bring more ‘grey’ remittances into the net.

Country-wise data

Pakistanis residing in Saudi Arabia remitted the largest amount of $691.8 million in August 2022. It was 19.15% higher than the $580.6 million received in July 2022.

Expatriates in the UAE sent home 16.48% higher amount as receipts rose from $456.2 million to $531.4 million.

Remittances from overseas Pakistanis in the UK dropped 10.2% to $369.7 million. They had sent $411.7 million in July 2022.

Moreover, remittances from other Gulf Cooperation Council (GCC) countries increased by 7.1% to $300.8 million, however, a 6.65% decrease was recorded in inflows from European countries, which clocked in at $274.8 million in the month under review compared to July.