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February 12, 2019

Remittances up 12.22pc to $12.774 billion in seven months

Business

February 12, 2019

KARACHI: Remittances from the overseas Pakistani workers grew 12.22 percent to $12.774 billion in the seven months of the fiscal year 2018/19, from $11.383 billion in the same period last year, the central bank data showed on Monday.

During January 2019, the inflow of remittances stood at $1.743 billion, which was 0.3 percent lower than the previous month and 6.4 percent higher than January 2018. The highest remittances were sent from the non-Gulf Cooperation Council (GCC) countries, especially the United States and the United Kingdom, the State Bank of Pakistan (SBP) data showed.

This could be attributed to increased economic activity in the developed economies that might have compelled the Pakistani diaspora to remit more to their families. Most of the remittances flowed from the US, followed by the UK and the UAE.

Migrant workers in the US sent home $2.004 billion in July-January FY19, compared with $1.504 billion in the corresponding period last year. UK remained the second top-sending country with a total of $1.942, compared with $1.585 billion sent a year ago.

The SBP’s data showed that remittances from the GCC and Saudi Arabia saw nominal growth during the seven months of the current fiscal year. This was due to the seasonal phenomenon.

The SBP, in its first quarterly report for the fiscal year 2018/19, said the pace of layoffs of Pakistani workers in the region has fallen in recent months, which might have led to a bottoming out of the decline in remittances from the Middle East region.

Remittances from UAE rose 7.50 percent to $2.700 billion, whereas the country received $2.971 billion from Saudi Arabia in July-January, compared with $2.914 billion last year.

Workers’ remittances remain a key source of financing Pakistan’s current account deficit. It does not create a repayment or repatriation obligation. Pakistan needs to attract remittance flows given the falling foreign exchange reserves and higher foreign debt payments.

The country is set to pay more than $5 billion in February to June 2019 which may result in pressure on balance of payments.

The SBP’s first quarterly report mentioned that the government and the central bank took various measures to support the inflow of remittances into Pakistan. There’s an expectation that Qatar would allow 100,000 Pakistanis to work there. Moreover, following the government’s suggestion, Saudi Arabia has agreed to reduce the visa fee for Pakistani workers.

This step would help enhance Pakistan's workforce in the kingdom. Furthermore, the government was initiating a survey of overseas Pakistani workers, specifically those in the Middle East, to get their feedback on further facilitating and incentivising the home remittance process. Besides the government, the SBP has also taken a number of measures to incentivise overseas Pakistanis to send remittances through legal channels.

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