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April 11, 2019

Workers’ remittances rise 8.74pc to $16.096bln in nine months

Business

April 11, 2019

KARACHI: Remittances from the overseas Pakistani workers increased 8.74 percent to $16.096 billion in the first nine months of fiscal year 2018/19, compared to $14.802 billion in the same period last fiscal, central bank’s data showed on Wednesday.

On a month-on-month basis, inflows during March 2019 stood at $1.745 billion against $1.803 billion in the corresponding month of 2018.

The country received $3.747 billion from Saudi Arabia in period under review, compared to $3.690 billion last year, whereas remittances from the United Arab Emirates rose 4.18 percent to $3.414 billion.

A major push came after inflows from United States jumped 23.58 percent to $2.516 billion, while influxes from the United Kingdom reached $2.475 billion in July-March FY19, compared with $2.117 billion a year ago.

The State Bank of Pakistan (SBP), in its second quarterly report published last month, said the economic turnaround in the US and the UK in the recent past resulted in declining unemployment and rising wages, and both factors contributed to a sharp rise in remittances from these countries.

Besides the US and the UK, inflows from Malaysia also supported overall remittances in the period under review.

Malaysia is emerging as one of the major sources of remittances and contributed $1.138 billion in July-March, up 38.82 percent from last year. Remittances from Malaysia have been rising persistently since FY13.

Over the last couple of years, Malaysia has been facing workforce shortage in labor-intensive sectors, such as manufacturing, construction and agriculture. Malaysia raised the wages for both local and foreign workers in its minimum wage policy of 2013.

“Pakistan’s labour migration to Malaysia had jumped in 2014- 15 and remains at elevated level since then, compared to 2013. This may explain the persistent increase in remittances from Malaysia,” the SBP said.

However, the inflows from Gulf Cooperation Council countries, the major source of Pakistan’s remittances, continued to depict a marginal growth.

Workers’ remittances remain a key source of financing of Pakistan’s current account deficit. It does not create a repayment or repatriation obligation.

Pakistan needs to attract remittance flows given the dwindling foreign exchange reserves and higher foreign debt payments due this fiscal year.

The central bank expects remittances to hit $20.5-21.5 billion in FY19. Remittances rose to $21.2 billion in last year from $19.6 billion in previous year.

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