Overseas Pakistanis send home remittances worth $2.5 billion, marking a seven-month high

According to data from the State Bank of Pakistan (SBP), remittances sent by overseas Pakistanis to their home country hit a seven-month high of $2.5 billion in March, which is attributed to Ramadan and Eid-ul-Fitr.

Compared to the prior month of February, the inflow of workers’ remittances increased by 27 per cent, but it was 11 per cent lower than March 2022. The legal channels for sending funds to family members were used more frequently, resulting in comparatively high inflows as the difference between the interbank and open market rates decreased.

Samiullah Tariq, the head of research at Pakistan-Kuwait Investment Company, described the increase as a positive sign. He explained that the kerb and interbank rates have minimal differences. Furthermore, the historical trend suggests that overseas Pakistanis send record-high remittances ahead of Eid festivals each year. The Ministry of Finance predicts that remittances will “further improve due to positive seasonal and Ramadan factors.”

The central bank reported that the cumulative inflow of $20.5 billion during the first nine months of the fiscal year 2022-23 led to a 10.8 per cent decrease in remittances compared to the same period last year. In addition, it is important to note that this month’s remittances have surpassed the trade deficit data of the Pakistan Bureau of Statistics (PBS), increasing the possibility of a current account surplus.

The Ministry of Finance also highlighted in its monthly outlook report that the current account deficit is expected to remain on the lower side due to the economic factors contributing to the figures. It should also be noted that the SBP trade deficit data point is usually even lower than the PBS trade deficit.