Remittances reach $3.2bn in April

KARACHI: Pakistan’s overseas worker remittances amounted to $3.2 billion in April, the central bank data showed on Friday, representing a 22 per cent decline from the record-high $4.1 billion in March.

However, remittances increased by 13 per cent year-on-year in April.The cash sent home by Pakistanis living abroad rose 31 per cent to $31.2 billion in 10 months through April from a year ago.

The decline in monthly remittances aligns with analysts’ forecasts. They expected that these inflows would decrease before increasing again in May and June, as overseas Pakistanis typically send more money home for purchasing sacrificial animals ahead of the Eidul Azha festival.

Sana Tawfiq, head of research at Arif Habib Limited, explained that the drop in remittances for the month occurred as the seasonal factors of Ramazan and Eidul Fitr came to an end. However, she noted that the monthly average rate of over $3 billion in remittances remains intact.

Tawfiq sees a potential current account deficit due to normalised remittances and a widening trade gap. She projects a deficit of $350-400 million in April.Remittances -- vital for Pakistan’s foreign exchange reserves -- increased in 10 months of this fiscal year. This rise can be attributed to the government’s efforts to encourage the use of formal channels for remittance flows, effective functioning of the domestic currency market, an increasing number of Pakistanis moving abroad, and an economic recovery supported by the International Monetary Fund’s (IMF) loan programme.

The SBP forecasts that the current account will remain in surplus throughout FY25. With expected official inflows, particularly those linked to the IMF, the SBP anticipates its forex reserves to rise to $14 billion by June 2025. Furthermore, remittance flows are expected to reach approximately $38 billion for the entire FY25.

Pakistan is looking to secure a $1 billion loan tranche from the IMF as part of its $7 billion bailout programme. The executive board meeting to review the country’s loan was scheduled for May 9 (Friday).

However, the uncertain global economic and trade environment, exacerbated by steep US tariffs and the ongoing conflict between Pakistan and India, may impact Pakistan’s economy.

Tensions between the two nuclear-armed neighbours have escalated following retaliatory attacks after a militant incident last month in occupied Kashmir. Both countries have accused each other of launching drone and artillery strikes.