Monthly remittances cross $3b mark for first time

Data released by the State Bank of Pakistan reveals inflows of $3.125 billion were recorded during April 2022.

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For the first time in Pakistan’s history, the monthly remittances from overseas workers have crossed $3 billion.

According to the data revealed by the State Bank of Pakistan on Friday, inflows during April 2022 were recorded at $3.125 billion. In terms of growth, remittances increased 11.2% on a month-on-month basis and 11.9% on a year-on-year basis.

Cumulatively, at $26.1 billion, remittances grew by 7.6% during the 10 months of FY22 compared to the same period last year. Saudi Arabia was the largest contributor to workers’ remittances with $6.517 billion during July-April FY22, up from $6.412 billion in the same period last fiscal year. From the UAE, remittances amounted to $4.898 billion, while an inflow of $3.671 billion was recorded from the UK and another $2.556 billion from the US.

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On a monthly basis, inflows were mainly sourced from Saudi Arabia ($707 million), the United Arab Emirates ($614 million), the United Kingdom ($484 million), and the United States of America ($346 million).

The development comes at a crucial time for Pakistan, which has seen its foreign exchange reserves deplete due to external debt servicing and a lower inflow of dollars. According to the latest data, reserves held by the SBP decreased another $190 million to $10.31 billion, said the central bank on Thursday, with the level staying at less than 1.5 months of import cover.

The falling reserves put pressure on the domestic currency as it plunged to an all-time low of Rs193.10 in the interbank market.

The country’s total foreign reserves, including net reserves of commercial banks, dipped to $16.375 billion, the central bank said. Net foreign reserves held by commercial banks were US$ 6.067 billion.

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The foreign exchange reserves of the country were $16.553 billion by the week which ended April 30, 2022.

Earlier this month, the SBP, under its home remittances promotion measures, allowed Exchange Companies (ECs) to maintain separate foreign currency accounts for each Money Transfer Operator (MTO).

In February, the government decided to provide an incentive of Re1 for each US dollar of home remittances surrendered in the inter-bank market, provided that the ECs surrender 100% of the foreign exchange received as inward home remittances.