KARACHI: Remittances to Pakistan from its citizens employed abroad hit their highest level for a single month in March, the central bank said on Thursday, rising 28.3% month on month. another, mainly due to the Ramazan effect.

Remittances in March reached $2.8 billion, the State Bank of Pakistan (SBP) said in a statement, adding that the increase was 3.2 percent from a year earlier. Pakistani workers abroad sent home $2.7 billion in the same month a year earlier.

“With $2.8 billion in inflows in March 2022, workers’ remittances continued their unprecedented run above $2 billion since June 2020. This is the highest monthly level ever. registered for workers’ remittances,” the SBP said.

“Remittances in March 2022 came mainly from Saudi Arabia ($678 million), the United Arab Emirates ($515 million), the United Kingdom ($401 million) and the United States of America ($300 million),” he added.

This improvement will help cushion a deterioration in the external current account situation. The increase in the amount paid during the fasting month of Ramazan is seen every year.

“The monthly increase was mainly due to the impact of Ramazan, which will also be reflected in the April figures,” said Tahir Abbas, head of research at Arif Habib Limited.

Abbas disagrees that a sharp depreciation of the currency has forced the country’s diaspora to send in more remittances. “Not much…the currency panic was in April, the numbers are from March,” he said.

Remittances continued to increase, helped by government incentives for overseas Pakistanis to send money home through official channels for convenience and security. In addition, the pandemic has limited cross-border mobility. Thus, expats transferred more money to their families and relatives to support them during the coronavirus crisis. However, remittance growth saw a decline in January and February 2022, weighed by the easing of travel restrictions and seasonal factors.

Remittances rose 7.1% to $23 billion in the nine months (July-March) of this fiscal year.

The rise comes as the new government hopes to negotiate with the International Monetary Fund to resume a $6 billion loan program that was in jeopardy after former Prime Minister Imran Khan provided energy subsidies to the masses, in violation of Pakistan’s agreement with the International Monetary Fund. Fund (IMF). The new government is faced with galloping inflation, depleted foreign exchange reserves, a large budget and a current account deficit.

Last week, the central bank raised interest rates by 250 basis points to 12.25% to head off a crisis.

Strong inflows should also help ease balance of payments difficulties. According to Fitch Ratings, the recent oil price shock will increase the current account deficit, adding to the already high gross external financing needs due to a high debt repayment schedule.

“We now expect a current account deficit of about 5% of GDP (about $18.5 billion) for the fiscal year ending June 2022 (FY22), down from 4% in our February review. We expect this to moderate to around 4% in FY23 as oil prices decline,” the report said. “Pakistan faces $20 billion in external debt repayments in FY23, though this includes $7 billion in Chinese and Saudi deposits that are expected to be rolled over. Higher trade deficits and outflows of capital led to a sharp depreciation of the Pakistani rupee against the US dollar.