Karachi, December 8, 2023 – The State Bank of Pakistan (SBP) has reported a notable decline in foreign remittances, revealing a 10 percent drop to $11.05 billion during the initial five months (July – November) of the current fiscal year 2023-2024.
This compares to foreign remittances amounting to $12.32 billion during the same period in the previous fiscal year.
The decline in remittances is attributed to various factors, with the uncertain value of the rupee against the dollar being a prominent contributor. Additionally, the prevalence of a grey market has encouraged unofficial transfers, offering overseas Pakistanis more favorable exchange rates compared to official channels.
Over recent months, the caretaker government, in collaboration with the central bank and law enforcement agencies, initiated a comprehensive crackdown against the hoarding and smuggling of foreign currency. These efforts have borne fruit, stabilizing the rupee against the greenback and instilling confidence in overseas Pakistanis to use formal banking channels for their transactions.
While these measures have shown positive outcomes, the month of November 2023 saw a further decrease in remittances, recording $2.25 billion. This marks an 8.6 percent decline compared to the previous month, which had seen remittances at $2.46 billion in October 2023.
However, when compared to November 2022, the recent figures reveal a 13.81 percent increase in remittance inflows. In the same month of the previous year, remittances stood at $2.173 billion. This suggests a year-on-year improvement, indicating resilience in the remittance sector despite the recent challenges.
The caretaker government’s concerted efforts to address issues related to the informal transfer of funds have positively impacted the stability of the rupee. By discouraging unofficial channels and promoting the use of formal banking channels, authorities aim to create an environment that fosters trust and compliance among overseas Pakistanis.
While challenges persist, including global economic uncertainties, the government’s commitment to maintaining a stable financial environment remains evident. The forthcoming months will likely see continued efforts to bolster the formal remittance channels, ensuring that the benefits of stability reach both the national economy and the expatriate community.
As the fiscal year progresses, stakeholders will closely monitor remittance trends, looking for signs of recovery and sustained growth. The government’s actions to strengthen the formal remittance channels are crucial for bolstering economic resilience and maintaining stability in the face of external pressures.
