Raza Khan

Remittances sent by Pakistani workers in the European Union (EU) countries fell by 6.75% in August 2022, the State Bank of Pakistan (SBP) reported.

Remittances from the EU countries dropped to $274.8 million in August from $294.7 million in the same month of last fiscal year. The SBP data shows that Pakistan received $294.4 million from the EU countries as workers' remittances in July 2023.

A decline of 6.65% in workers' remittances from the EU was also recorded during the month under review when compared to remittances received in the preceding month of July. Pakistan received $294.4 million remittances from the EU in July.

Overall workers' remittances in the first two months (July-August) of the current fiscal year 2022-23 from the EU countries declined by 4.46% as compared to the same period of last fiscal year.

Remittances from the EU in July-August 2022 dropped to $569.2 million from $595.8 million in the same months of 2021. A decline of 3.15% was also witnessed in Pakistan’s overall workers' remittances in the first two months of 2022-23. The country’s total workers' remittances stood at $5.2477 billion in July-August this year against $5.4187 billion in the same period of last year.

Dr Sajid Amin, Deputy Executive Director at Sustainable Development Policy Institute (SDPI), told WealthPK that the main reason behind the decline in remittances, especially from western countries, is the rising inflation.

“Current economic crunch in UK, EU and US is a matter of concern for remittances inflows from major destinations in the coming months,” Sajid said.

He said that cost of living for Pakistani diaspora in Europe has gone up as the energy prices soared in recent months, especially after the Russia Ukraine conflict.

“Pakistanis abroad are finding it difficult to send more money back home,” he maintained.

“Remittances are an important component of the economy for Pakistan which has seen its foreign exchange reserves drain due to external debt servicing,” Sajid said, adding that the country needs remittances to keep the economy afloat.

According to the SBP data, workers' remittances from Italy declined by 1.68% in August this year and fell to $76 million from $77.3 million in August last year.

Similarly, remittances from France also decreased by 6.52% and were recorded at $40.1 million during the month under review against $42.9 million in the corresponding period of last year.

Remittances from Germany, Sweden, Ireland, Belgium, the Netherlands and Denmark also posted negative growth during the month under review.

With $691.8 million, Saudi Rabia remained Pakistan’s largest source of remittances in August, but still, a decline of 3.37% was recorded in remittances from the kingdom.

Pakistan had received $3.361 billion in 2021-22 from the EU countries as remittances, 23.2% higher as compared to 2020-21 when numbers were at $2.7286 billion.

Italy remained Pakistan's largest source of workers’ remittances among the EU countries during the last fiscal year with $856.7 million, followed by Spain and Germany.

Overall, Saudi Arabia remained Pakistan’s largest source of remittances in 2021-22 with a volume of $7.7433 billion followed by the United Arab Emirates (UAE). Remittances from the UAE were $5.8418 billion FY22.

Credit: Independent News Pakistan-WealthPk