Pakistan's remittances slide to $27.02bn in FY23 against $31.28bn in FY22

Disparity in official, open market exchange rates big factor behind this trend

KARACHI (Web Desk) – Pakistan witnessed a significant decline in remittances during the last fiscal year 2022-23 as the amount dropped to $27.02 billion against $31.28bn recorded in 2021-22, representing a 13.6 per cent contraction.

The latest data comes at a time when the country is going through a serious financial crunch which had raised prospects of default for some circles. However, they are silent now after Pakistan reached a staff-level agreement on the $3bn stand-by

arrangement with the International Monetary Fund (IMF).

According to the State Bank of Pakistan (SBP), the figures for June improved when compared with the previous month of May after the remittances increased by 4pc to $2.183bn. However, there was a 22pc decline against the $2.8bn level reached in June 2022.

The SBP data had shown last month that Pakistan experienced a 13pc decline in remittances during the July-May period of 2022-23 when compared with the corresponding period of last year [2021-22] due to multiple factors ranging from record-high inflation and the better exchange rate offered by black market.

Read more: Pakistan sees remittances dipped to $24.83bn in 11MFY23

This decrease is basically triggered by the high inflation and economic slowdown in host countries, forcing the expats to tighten their belt.

But the huge difference in exchange rate between the official and the open market means that the more people were inclined to use unofficial mode of transfer – hawala and hundi – giving a boost to the black market.

However, the growing parity in official and open market exchange rates after the IMF deal means that the expats will now again start using banking channels.