Remittances dropped to a 32-month low of $1.89 billion in January.

KARACHI: According to the State Bank of Pakistan, worker remittances to Pakistan dropped to a 32-month low in January 2023, dropping below the $2 billion threshold (SBP). The total amount of remittances was $1.89 billion, down 10% from December 2022 and down 13% from the same month the year before.

The lack of inflows has strengthened the nation’s reliance on its already unaffordable foreign debt. Remittances decreased 11% to $16 billion in the first seven months of the current fiscal year (July-January 2023) compared to $18 billion in the same period previous year.

Saudi Arabia ($407.6 million), the United Arab Emirates ($269.2 million), the United Kingdom ($330.4 million), and the United States ($213.9 million) made up the majority of remittances in January 2023.

Following the rupee’s depreciation in the interbank market to approximately Rs270 against the US dollar, experts predict an improvement in inflows over the upcoming months. Up until January 24, 2023, the devaluation had been a constant 225–230 rupees per dollar.

Additionally, because of the historically high inflation, it is anticipated that Pakistanis living abroad will send more money to their family members during the next Ramazan month. Remittances often increase during the holy months of Ramadan and Eid, according to historical trends.

It is thought that a portion of Pakistanis living abroad prefer to send money to their family members through unofficial and illegal routes, such as hawala-hundi, which accounts for the large decline in remittances through official channels like banks and exchange businesses.

The costs supplied through these unofficial channels are much higher, ranging from Rs250-260/$ to the Rs225-230/$ offered through formal channels. Concerns regarding the viability of the nation’s economy and the requirement for the government to find alternate sources of funding have been highlighted by the reduction in remittances from employees. The SBP is still silent on the subject.