The country’s central bank reported that remittances sent home by Pakistanis working abroad dropped to $27bn for the fiscal year 2023, from $31.3bn the previous year.
June remittances were down to $2.2 billion from $2.8 billion a year ago, according to central bank figures. The United States ($272.3m), United Arab Emirates ($324.7m), United Kingdom ($343m), and Saudi Arabia ($515.1m) were the top four countries contributing to the remittance total.
Although Tonga, Lebanon, and Samoa rely on remittances as a larger share of their GDP, Pakistan was the sixth largest beneficiary of remittances in the world in 2022, after India, Mexico, China, the Philippines, and Egypt.
The economic collapse of Pakistan with declining remittances
Pakistan’s economy, already suffering its greatest crisis since achieving independence from Britain in 1947, will take another hit as a result of the decline.
Pakistan’s central bank is attempting to get a bailout from the International Monetary Fund (IMF) after years of financial mismanagement, a global energy crisis, and severe flooding damaged the economy. On July 12, the IMF board will vote on whether or not to approve a $3 billion short-term credit package.
In response to IMF requests, Islamabad has just updated its 2023-24 budget and increased its benchmark interest rate to 22 percent. The IMF also got Pakistan to raise more than 385 billion rupees ($1.41bn) in new taxation to achieve their budget adjustments. As a result of the adjustments, in May inflation reached a record high of 38% year over year, the highest in all of Asia.
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