According to data released by the State Bank of Pakistan (SBP) on Wednesday, the inflow of foreign remittances into Pakistan has sharply dropped by 29% during the month of April 2023.
The inward remittances fell to $2.21 billion compared to $3.12 billion in the same month of the previous year.
Experts attribute this decline to the volatile exchange rate and uncertain political conditions, which have shattered the confidence of overseas Pakistanis. The Pakistani Rupee (PKR) reached an all-time low of PKR 290.22 against the US dollar on May 10, 2023, due to deteriorating economic conditions over the past couple of years.
The arrest of former Prime Minister Imran Khan on corruption charges has further aggravated the political situation. Imran Khan’s large following among overseas Pakistanis makes his arrest particularly impactful, as it may negatively affect their sentiments and confidence.
In total, the inflow of home remittances recorded a 13% decline during the ten-month period from July to April 2022-2023, amounting to $22.74 billion compared to $26.14 billion in the same period of the previous fiscal year.
The major decline of 19% in remittances is seen from the United Arab Emirates (UAE), with inflows recording $3.98 billion during July to April 2022-2023, compared to $4.91 billion in the corresponding months of the previous fiscal year. This is followed by a 17% decrease in inflows from Saudi Arabia, amounting to $5.4 billion during the same period under review, compared to $6.53 billion in the corresponding months of the previous fiscal year.
Meanwhile, inflows from the USA remained relatively flat at $2.57 billion during the first ten months of the current fiscal year, compared to $2.56 billion in the same period of the previous fiscal year. Home remittances from the UK experienced a 7.2% decline, totaling $3.41 billion during July to April 2022-2023, in contrast to $3.67 billion in the same period of the previous fiscal year.
The decrease in foreign remittances poses significant challenges to Pakistan’s economy, highlighting the need for stability and improved economic conditions. The government must address the concerns surrounding the exchange rate, political uncertainty, and investor confidence to encourage higher remittance inflows and support the country’s financial well-being.