Karachi, October 10, 2023 – Pakistan has experienced a significant 20 percent decline in foreign remittances during the first quarter (July – September) of fiscal year 2023-24.
The State Bank of Pakistan (SBP) released data on Tuesday, revealing that the inflow of workers’ remittances into the country dropped to $6.33 billion, compared to $7.90 billion in the corresponding quarter of the previous fiscal year.
Economic analysts attribute this decline to a combination of factors, including weak economic conditions and exchange rate uncertainties, which have deterred foreign inflows during this period. Pakistan’s rupee has witnessed a dramatic depreciation over the past year, making it one of the weakest currencies globally. Additionally, the proliferation of black market transactions and hawala hundi operations has attracted expatriate Pakistanis to opt for informal channels to send money back to their homeland.
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However, the current caretaker government has taken decisive steps to stabilize exchange rates. The Pakistani rupee has made a remarkable gain of PKR 25.59, equivalent to 8.66 percent, against the US dollar since reaching its lowest level of PKR 307.10 on September 5, 2023. This significant recovery in the rupee’s value has encouraged overseas Pakistanis to revert to formal channels for transferring their money.
The impact of these currency stabilization measures was most evident in September 2023, with remittances surging to $2.21 billion, compared to $2.09 billion in August 2023. This positive trend suggests that the government’s efforts to shore up the rupee and promote transparency in remittance flows are yielding results.
While the decline in remittances during the first quarter of FY24 was concerning, the recent resurgence in September signals a potential turnaround. It remains crucial for the government to maintain its commitment to economic stability and exchange rate control to ensure the long-term confidence of overseas Pakistanis in formal remittance channels.
As Pakistan continues to navigate economic challenges and attract foreign investments, restoring faith in the country’s financial system will be essential to bolstering its foreign exchange reserves and stimulating economic growth.
