As a result of the dollar cap, which the government had previously established to fix the rupee’s exchange rate against the dollar, illegal transfers through ‘Hundi, Hawala,’ resulting in a two-year low for remittances sent home by Pakistani employees living abroad.
The State Bank of Pakistan (SBP) data depicts that remittances decreased to $1.9 billion in January 2023 from $2.1 billion in December to $2.18 billion in January 2022. However, in May 2020, remittances totaled $1,186.5 trillion.
The remittances declined by 9.9% on a month-on-month basis and by 13.1% year-on-year basis. During the first seven months of FY23, from July to January, total remittances were $16 billion, an 11% reduction compared to last year.
As stipulated by the International Monetary Fund (IMF), the dollar cap was lifted by the end of January, paving the path for releasing the crucial $1.1 billion loan tranche.
In January 2023, most remittances originated from Saudi Arabia ($407,6 million), the United Arab Emirates ($269.2 million), the United Kingdom ($330,4 million), and the United States ($213,9 million).
