In March, remittances sent by overseas Pakistanis reached a seven-month high of $2.5 billion. The increase in inflow was attributed to Ramadan and Eid ul Fitr, which occurred earlier this year compared to last year.
The State Bank of Pakistan’s data showed a 27% increase compared to February but an 11% decrease compared to March 2022. The use of legal channels by non-resident Pakistanis to send funds to their families was a contributing factor to the high inflow, as the gap between rates in the interbank and open market narrowed.
Samiullah Tariq, head of research at Pakistan-Kuwait Investment Company, viewed the increase as a “good omen,” and stated that the difference between the kerb and interbank rates was minimal. Historical trends indicate that remittances from overseas Pakistanis increase before Eid festivals every year.
The Ministry of Finance predicts that remittances will continue to improve due to positive seasonal and Ramadan factors.
According to the central bank’s monthly remittance bulletin, the cumulative inflow of remittances during the first nine months of the fiscal year 2022-23 was $20.5 billion, representing a 10.8% decrease compared to the same period last year.
Despite the decline, remittances have widely surpassed the Pakistan Bureau of Statistics’ trade deficit data this month, increasing the possibility of a current account surplus. It should be noted that the SBP’s trade deficit data is typically lower than the PBS’s data.
The Ministry of Finance’s monthly outlook report stated that the current account deficit is expected to remain low due to economic factors contributing to the numbers.