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Tuesday, February 7, 2023
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The puzzling decrease in remittances

The bank also highlighted that the workers’ remittances had maintained their record streak of over $2 billion every month for the last 26 consecutive months.

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In the first month (July) of new financial year, remittances sent by overseas Pakistanis decreased to a five-month low at $2.52 billion. Although, inflow from workers’ remittances rose to a record $31.2 billion in FY22.

Remittances declined by 8.59 percent to $2.52 billion in July compared to $2.76 billion in the preceding month of June 2022.

Read more: Remittances rose to a record $31.2 billion in FY22: SBP

The State Bank of Pakistan (SBP) mentioned the reason behind this decline on official Twitter handle, “this was due to considerably fewer working days because of Eid holidays.” It also added that the daily average rate of remittances was 18 percent higher in July than in June. In the month of July, there were only 17 working days in comparison to 22 in June and 18 in July 21.

The bank also highlighted that the workers’ remittances had maintained their record streak of over $2 billion every month for the last 26 consecutive months.

Moreover, Head of Research at Arif Habib Limited also agreed with the bank’s stance and said historical evidence implied that remittances normally decline in the month after Eid.

In addition, Eid holidays in the Middle East were extended because of Hajj and Umrah seasons during July. So, their business centers as well as the money senders remained closed.

According to the experts, no other significant event has taken place that could have any negative influence on the foreign remittances in July.

Middle Eastern countries (mainly Saudi Arabia and UAE) are the main contributors in Pakistan’s remittances as majority of nationals prefer to migrate to those countries for the sake of job.

Saudi remittances fell by 12 percent to $581 million in July 2022, compared to $660 million in the same month the previous year. Inflows from the UAE fell 17% to $456 million in the month, compared to $548 million in the same month last year.