Karachi: Remittances inflows dropped by nearly 5% on a month-on-month basis in November of the fiscal year 2023, a drop that is being attributed by analysts to the rise of “unofficial channels” like hawala and hundi.
According to the figures released by the State Bank of Pakistan (SBP), the total amount of inflows was recorded at $2.1 billion in November of FY23, which amounted to $2.21 billion in October. On an MoM basis, the inflows declined by 4.8%, according to the data.
— SBP (@StateBank_Pak) December 14, 2022
In the corresponding month last year, the remittances inflows amounted to $2.46 billion. Compared to that, the inflows fell sharply by 14.3% in November this year.
The trend of sharp decline has also been observed during the first five months of FY23 compared to the same period last year, as the remittances inflows amounted to $12 billion this year compared to $13.3 billion recorded last year.
Experts believe that the sharp decline in remittance inflows is due to the fact that overseas Pakistanis have opted for unofficial channels as they are offering a much higher exchange rate.
This is evident from the fact that where the interbank rate of the US dollar stands at Rs224.70, it is not easily available below the Rs240 range.
It is important to note that Pakistan heavily depends on the influx of remittances to meet its foreign exchange needs because exports hardly cover the high level of imports.
Trade deficit widens to 24% in November MoM
According to the Pakistan Bureau of Statistics (PBS), the trade deficit of Pakistan widened to 24% in November on a month-on-month basis.
According to the provisional statistics on trade, the PBS earlier this month reported that during November, the trade deficit swelled to $2.876 billion from the $2.327 billion deficit recorded in October.
According to the report, imports amounted to $5.245 billion in November, whereas exports were recorded at a mere $2.369 billion.