Pakistani expatriates sent home $2.5 billion in remittances in March, a seven-month high, the State Bank of Pakistan said on Monday, as the cash-strapped country tried to avert a major economic crisis. The data from the central bank showed that the inflow of workers’ remittances was 27 per cent higher compared to February. However, it was 11 per cent lower compared to March 2022, Geo News reported.
Pakistan, currently tackling a major economic crisis, is grappling with high external debt, a weak local currency and dwindling foreign exchange reserves. According to the report, historical trends suggest that Pakistanis living abroad sent record-high remittances ahead of Eid festivals each year.
According to the report, inflows remained comparatively high as non-resident Pakistanis used legal channels to send funds to their family, given the shrinking gap between rates in the interbank and the open market. Pakistani expatriates in Saudi Arabia topped the list of remittances by sending an amount of $563.9 million in March. However, it was 24.04 per cent lower than the $454.6 million received in February, the report said.
Pakistanis living in the UAE sent home 25.52 per cent more as receipts increased from $406.7 million to $324 million. Remittances from overseas Pakistanis in the UK increased 33.12 per cent to $422 million, the report said, adding that they sent $317 million in February. Head of Research at Arif Habib Limited, Tahir Abbas, said that the monthly increase in the remittances is due to the Ramzan factor that usually fetches higher flows due to family commitments, welfare, and charity, among other things.
"The flows in the upcoming months are expected to remain elevated due to another Eid falling by the end of this fiscal year," Abbas was quoted as saying in the report. Terming the increase a “good omen”, Head of Research at Pakistan-Kuwait Investment Company, Samiullah Tariq, said, “Remittances number is highest for past seven months; however, this year Ramzan has started earlier which is why remittance inflow increased earlier than last year,” the report said.
According to a prominent US-based think tank, the United States Institute of Peace, Pakistan needs to repay a whopping $77.5 billion in external debt from April 2023 to June 2026. It added that the cash-strapped country might face disruptive effects if it ultimately defaults. Pakistan is awaiting a much-needed $1.1 billion tranche of funding from the Washington-based International Monetary Fund, originally due to be disbursed in November last year.
The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations. The IMF programme, signed in 2019, will expire on June 30, 2023, and under the set guidelines, the programme cannot be extended beyond the deadline. Pakistan and the IMF have been negotiating the programme's resumption for months but have yet to reach an agreement.