By Staff Reporter
KARACHI: Money sent home by Pakistanis living abroad rose 6.1 percent in the last fiscal year of 2021-22 to $31.2 billion, the central bank said on Monday, setting a new annual record and cushioning the weakening rupee.
Known as remittances, the cash is a major source of foreign exchange for the south Asian second biggest economy alongside textile. Pakistani abroad typically send money to help their families and to invest in projects like real estate.
Remittances helped slow down the decline of the local currency, which fell 16.5 percent in FY22. The country faced massive current-account deficit in the last fiscal year, and was dependent on external inflows.
Pakistan needs about $36 billion to $37 billion in financing for the current fiscal year started in June. Morgan Stanley estimates the funding gap to be as high as $8 billion.
The central bank foreign exchange reserves dropped by $99 million to $9.718 billion during the week ended July 7 on external debt payments, while the country’s total foreign reserves fell by $132 million to $15.61 billion and those of commercial banks declined by $33 million to $5.89 billion. The central bank’s reserves are hardly enough for five weeks of imports.
Analyst said the surge in remittances have been critical in restraining rises in the current account deficit though it has swelled to $15.2 billion in the first eleven months of the fiscal year 2022.
In terms of growth, remittances in June increased by 18.2 percent on a month-on-month basis and 1.7 percent year-on-year to $2.76 billion.
Remittances came mainly from Saudi Arabia with $666 million, the United Arab Emirates with $495 million, Britain with $455 million and the United States with $285 million, the central bank said, citing cumulative figures.
Remittances exceeded for the first time ever a monthly record of $3.1 billion in April.
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