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Remittances sent home by Pakistanis living abroad reached a seven-month high of $2.5 billion in March, owing to Ramadan and Eid ul Fitr.
The inflow of worker remittances was 27% higher in February compared to the previous month, but 11% lower compared to March 2022, according to data released by the State Bank of Pakistan (SBP) on Monday.
Furthermore, inflows remained relatively high as non-resident Pakistanis used legal channels to send funds to family members as the spread between interbank and open market rates narrowed.
The increase was deemed a “good omen” by Samiullah Tariq, head of research at Pakistan-Kuwait Investment Company, who added that the difference between the kerb and interbank rates was minimal.
“Remittances have been at an all-time high for the past seven months; however, Ramadan began earlier this year, so remittance inflows increased earlier than last year,” he explained.
According to historical trends, overseas Pakistanis sent record-high remittances ahead of Eid festivals every year.
According to the Ministry of Finance, remittances will “further improve due to positive seasonal and Ramadan factors.”
Meanwhile, the central bank reported in its monthly remittance bulletin that remittances decreased by 10.8% during the first nine months of the fiscal year 2022-23, with a total inflow of $20.5 billion compared to the same period last year.
It should also be noted that, with remittances exceeding the Pakistan Bureau of Statistics (PBS) trade deficit data this month, the possibility of a current account surplus has grown significantly.
It is worth noting that the SBP trade deficit data point is typically lower than the PBS trade deficit.
The Ministry of Finance also stated in its monthly outlook report that the current account deficit is likely to remain on the lower side given the economic factors contributing to the figures.
