Slowdown in remittances from Middle East adds to Pakistan’s economic woes

Amid an overall slowdown of remittances flowing into Pakistan during the July-February period of its ongoing financial year, what has hit policy makers harder is the drop in inflow from West Asian countries including UAE and Saudi Arabia – considered Islamabad’s traditional allies.

Data available with the State Bank of Pakistan revealed that while during the July to February period of 2021-22, Pakistan received remittances of $ 5,141.4 million from Saudi Arabia, the amount is significantly lower at $4,346.6 in the corresponding period of the ongoing financial year. Pakistan’s financial year commences from July. Similarly, remittances from UAE which stood at $3,777 million in the same period of the previous financial year, have now dropped to $3,197.6.

Remittances from the Gulf Cooperation Council (GCC) and European Union have eased too.

Remittances from the US however have grown.

Besides remittances during the Ramzan period have also been typically higher than other months, but this year citizens are struggling. However, a substantial chunk of the inflow is taking place through informal channels and the hawala route.

An analyst said that the trend is due to the deteriorating economic situation in the county.  “If the money is sent through formal channels, there is fear among citizens that they may be barred from withdrawing..that is causing many to remit money through informal channels or the hawala route,” he said.

Earlier, local news organisation Geo TV noted that about 90 per cent of dollars are being hoarded in Pakistan while currency smuggling has just a 10 per cent share.

Shortage of food and other essential items have hit the citizens during the Ramzan period. Pakistan’s record inflation of 35.4 per cent in March. The surge in food prices have also led to closure of many charity kitchens in the country that typically run around the holy month of fasting. But this year, this month has been marked by food riots that have left several dead.

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