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KARACHI: The country witnessed a significant surge in remittances during the first quarter of the current fiscal year (FY25), with inflows jumping 39 per cent compared to the same period last year.
The State Bank reported on Wednesday that September remittances saw a remarkable 29pc increase compared to the same month last year.
“Workers’ remittances recorded an inflow of $2.8 billion during September 2024,” said the SBP. In September 2023, the inflow was $2.208bn; thus, the increase in September was $641 million or 29pc. On a month-on-month basis, the inflows in September decreased by $94m, as the inflows in August were $2.943bn.
Crackdown on smuggling, incentives for exchange firms start paying off
However, quarterly inflows were significantly high, increasing by 39pc to $8.786bn during July-September FY25, compared to $6.332bn in the same quarter of FY24. The country received almost $2.5bn more in remittances during this quarter compared to that of last year.
The government and the State Bank are working to improve inflows as crackdowns on smuggling and illegal currency businesses have brought them down to the lowest levels, while incentives are being offered to encourage higher remittances.
On Tuesday, the State Bank announced incentives for exchange companies to boost remittances, offering up to Rs4 per dollar for remittances, up from just Re1 per dollar previously. This significant increase in incentives was welcomed by the exchange companies, which are now optimistic about increasing remittances to $6bn in FY25. In FY24, the exchange companies’ contribution to remittances was $5bn.
The higher remittances provide more dollars than export proceeds. Total remittances in FY24 were $30.25bn, while FY22 saw record inflows of $31.279bn. These remittances have provided a significant cushion against the current account deficit (CAD), which fell to just $665m in FY24. In the first two months of FY25, the deficit reduced to $171m compared to $893m in FY24.
If the high trend of inflows continues, the country could potentially receive more remittances than the previous record of $31.3bn. According to SBP data, the highest inflows came from Saudi Arabia, reaching $2.2bn with an increase of 42pc compared to last year.
Remittances from almost all destinations of Pakistani expatriates have registered significant increases during the first quarter of FY25. Inflows from the UAE rose by 67pc to $1.7bn, while remittances from the UK jumped by 41.6pc to $1.34bn.
Remittances from European countries have been increasing for several years, noting a growth of 29.4pc in the first quarter, with total inflows during the three months standing at $1.092bn.
Inflows from EU countries have now surpassed those from GCC countries, which totaled $861m during this quarter, still reflecting a 19.4pc growth compared to the same period of the last fiscal year. The inflows from the USA during this quarter increased by 17pc to $897m.
Published in Dawn, October 10th, 2024
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