The State Bank of Pakistan (SBP) has shared data indicating that remittances sent by overseas Pakistanis, which had reached a seven-month peak in March, dropped by 29% year-on-year to $2.21 billion in April.
Last month’s higher remittances were linked by analysts to Ramadan and Eid ul Fitr, as well as the closing gap between the rates in the interbank and open markets, which encouraged overseas Pakistanis to use legal channels to send money home.
The latest figures show that remittances in April fell by 13% compared to the previous month, where it was recorded at $2.5 billion.
Saudi Arabia accounted for the highest inflows, with Pakistanis living there sending back $489.3 million in April, followed by the United Arab Emirates at $382.1 million, the United Kingdom at $360.7 million, the United States at $275.8 million, and European Union countries at $257.3 million.
Pakistan’s ongoing liquidity crunch and serious balance of payments crisis remain a concern. The central bank’s foreign exchange reserves stood at $4.46 billion as of April 28, insufficient to cover imports for a month – a position that has lasted for several months.
Meanwhile, talks between the Pakistani government and the International Monetary Fund (IMF) have not progressed successfully to revive a suspended loan program.
Moody’s Investor Service warned that Pakistan could default without an IMF program as its financing options beyond June are “uncertain.” Sovereign analyst with the ratings firm in Singapore, Grace Lim, stated that “Pakistan will meet its external payments for the remainder of this fiscal year ending in June. However, Pakistan’s financing options beyond June are highly uncertain. Without an IMF programme, Pakistan could default given its very weak reserves.