After all the worrisome economic conditions which had caused an overall economic downturn, inflow from workers’ remittances rose to a record $31.2 billion in FY22, 6 percent higher as compared to FY21. Since 2020, highest monthly average of workers’ remittances has been received in FY22 which is of $2603.1 million.
According to data published by the State Bank of Pakistan (SBP) on Monday, inflows amounting to $2.761 billion came in during June 2022 alone, compared to $2.332 billion in May 2022, an increase of $428.5 million or 18.4% on a month-on-month basis.
Year on year (YoY) rise of 1.7 percent was observed in June 2022.
According to the central bank, this development was “anticipated.”
As anticipated, remittances in FY22 rose to a record $31.2 bn, up 6% compared to FY21. In June, they rose to $2.8 bn, increasing by 18% compared to May 22 and 2% compared to Jun 21. See: https://t.co/7XBd4uNES4
Visit #EasyData to view interactive chart https://t.co/bOIQjODIsE pic.twitter.com/Hrj8fiXNjy
— SBP (@StateBank_Pak) July 18, 2022
Significance of remittances for the economy
Remittances are an important component of the Pakistani economy, which has seen its foreign exchange reserves depleted due to external debt payments. With persistent trade deficit, Pakistan relies on remittances to cover its foreign exchange requirements.
According to the SBP, the country’s total liquid foreign exchange reserves fell by $132 million in the last week to $15.611 billion on July 7, 2022, in comparison to $15.742 billion on June 30, 2022.
Sources of remittances
Saudi Arabia remained the greatest contributor to worker remittances in FY22, with $7.743 billion, up from $7.726 billion in the same time during last fiscal year.
Inflows from the United Arab Emirates, on the other hand, totaled $5.842 billion, representing a 5 percent decrease. The United Kingdom contributed $4.487 billion, while the United States contributed $3.082 billion.
Remittance inflows during June 2022 were mainly sourced from Saudi Arabia worth $666 million, followed by the UAE ($494 million), UK ($454 million) and the US ($284 million).
Looking at the past, remittance inflows during December 2021 were mainly sourced from Saudi Arabia ($626.6 million), United Arab Emirates ($453.2 million), United Kingdom ($340.8 million) and United States of America ($248.5 million).