Remittances from Pakistani workers abroad increased to $15.8 billion in the first six months of this fiscal year, 11.3% higher than a year earlier. Remittances are one of the greatest sources of foreign exchange inflows for Pakistan. These largely finance the country’s trade deficit, contribute to the forex reserves accumulation, and reduce the government’s external financing needs. Record remittances sent by Pakistanis working abroad are the main source of foreign exchange for Pakistan, struggling to increase its exports. The State Bank retains the foreign remittances as such foreign remittance increases the foreign exchange, which is used as reserves and ultimately is used to pay bank loans to World Bank, International Finance Corporation, and other foreign banks.
Remittance flows continued to maintain a rising trend and hit the highest level for six months in July-December FY2022. Remittances to the country stayed healthy, underpinned by the expats’ government incentive to send money home through official channels. Limited air travel of overseas Pakistanis to the homeland due to pandemic restriction in various regions also resulted in more funds transfer through legal channels and supported the rise in remittances. Worker’s remittances rose to their highest ever for the first half of this fiscal year, and this trend is expected to continue in the second half. It is expected to g more than $31 billion in FY2022.
The inflow comes largely from Saudi Arabia, United Arab Emirates, the UK, and the United States. These inflows contributed 25% to the overall remittances in the period under view. In terms of growth, remittances increased by 2.5% month-on-month and 3.4% year-on-year in December 2021.
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