Workers’ remittances up 8.4pc to $17.8bln in 10 months

KARACHI: Workers’ remittances grew 8.45 percent year-on-year to $17.875 billion in the first 10 months of the current fiscal year as foreign inflows from all the key countries continued to show growth during the period, the central bank's data showed on Friday.

Remittances, which are one of the country’s major sources of foreign currency, amounted to $16.481 billion during the corresponding period a year earlier.

Though overseas workers sent more money home during the period under review than a year ago growth slowed to single digit since March 2019 amid below-than-expected inflows from Saudi Arabia and the gulf countries, the major sources of remittances.

The State Bank of Pakistan’s (SBP) data showed that the highest percentage growth was witnessed from the US as remittances from the country rose 21.81 percent year-on-year to $2.786 billion in the July-April period of FY2019. Remittances from the UK increased 16.61 percent to $2.755 billion. Remittances from Saudi Arabia rose 2.08 percent to $4.175 billion. The country received $3.786 billion from UAE, including Dubai, Abu Dhabi and Sharjah during the July-April period, up 4.04 percent over the corresponding period a year earlier. Remittances from other Gulf Cooperation Council countries including Bahrain, Kuwait, Qatar and Oman, however, fell 5.39 percent to $1.717 billion in the first 10 months.

Home remittances contributed to more than six percent to GDP, equivalent to 85 percent of the country’s exports and more than one-third of imports during the last fiscal year of 2017/18.

The government and the central bank have taken a number of initiatives to promote transfer of home remittances using formal financial channels.

Analysts said blockchain technology-based remittance service – known as digital ledger – would complement the efforts as transfer of cross-border remittances in near real time would bring convenience and facilitation for both remitters and their beneficiaries. Remittances fuel consumer spending and foster the central bank’s foreign exchange reserves.

The country needs to attract more remittance flows due to dwindling foreign currency reserves and higher foreign debt payments. The foreign exchange reserves held by the SBP stood at $8.984 billion as of May 3 compared with $8.805 billion in the previous week.

The government expected financing gap to reach $10 to $11 billion in the next fiscal year of 2019/20 with a new economic assistance program from the International Monetary Fund likely to provide cushion to anemic balance of payment position.

In April, inflow of workers’ remittances stood at $1.778 billion, which was two percent higher than the previous month and six percent up compared to the corresponding month a year earlier, according to the SBP’s official data.