KARACHI: Pakistan received another blow on the macroeconomic front as overseas workers’ remittances fell 5% to $1.77 billion during May 2018.
Remittances stood at $1.86 billion in May 2017, according to the State Bank of Pakistan (SBP). The slowdown in remittances during Ramazan and ahead of Eid is surprising, as overseas Pakistani are expected to send higher remittances during these days.
However, a slowdown in oil producing and exporting countries may have caused low remittances.
The remittances, however, were 7.3% higher than $1.65 billion received during the previous month of April 2018, the SBP added.
The government has taken over the economic management of the country with its foreign currency reserves at a critically low level of only two months’ import cover. The slowdown in remittances may toughen the challenge for the government to narrow down excessively high current account and trade deficits.
Speculations suggested the government was negotiating a bailout package with the International Monetary Fund (IMF), which Interim Finance Minister Dr Shamshad Akhtar has categorically denied.
Co-incidentally, the SBP devalued the Pakistani currency by 3.65% to Rs119.84 to the US dollar in the inter-bank market on Monday. The central bank elaborated in a statement that the downward adjustment in the rupee reflected mounting pressure on the country’s foreign currency reserves. This was the third round of rupee devaluation since December 2017. The rupee has already shed 9.5% (5% in December 2017 and 4.5% in March 2018) against the US dollar.
Remittances in 11 months
The remittances sent home by overseas Pakistani in the first 11-month of the outgoing fiscal year (July to May FY18) stood at $18.02 billion, which is almost 3% higher than $17.51 billion received during the same period in the preceding year.
Experts suggest that the country is most likely to miss the remittance target of $20.7 billion by the end of FY18.
The country-wise details suggested inflows from Saudi Arabia amounted to $432.05 million for May 2018 compared to $514.5 million in May 2017. Inflow from UAE amounted to $369.92 million compared to $426.68 million in the previous year. Workers in the US sent $276.55 million compared to $248.88 million in May 2017.
UK ($254.31 million compared to $239.2 million), GCC countries (including Bahrain, Kuwait, Qatar and Oman) ($178.96 million compared to $209.95 million) and EU countries ($60.31 million in the month compared to $51.2 million in May 2017) were also among the major contributors.
Remittances received from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during the month amounted to $316.77 million as against $271.79 million received in May 2017.
Published in The Express Tribune, June 12th, 2018.