Remittances increase to $16.9bln in July-March

KARACHI: Workers’ remittances increased six percent to $16.9 billion in the first nine months of the current fiscal year of 2019/20, the central bank’s data showed on Friday. The State Bank of Pakistan (SBP) said workers’ remittances rose $960.7 million from $16 billion in the corresponding period a year earlier.

In March, workers’ remittances amounted to $1.9 billion recording an increase of $69.4 million or 3.8 percent over remittances received during February. The remittances during March increased $160.9 million or 9.3 percent over remittance received during the corresponding month a year earlier. In March, larger amounts of workers' remittances were received from Saudi Arabia ($452.3 million), UAE ($420.4 million), USA ($352.4 million) and UK ($248.5 million). Remittances increased 7.2 percent, 8.6 percent and 5.5 percent for Saudi Arabia, UAE and USA, respectively and decreased two percent from UK, compared to February.

Foreign remittances, accounting for 6.5 percent of GDP, are a key source of sustenance to Pakistan’s fragile external account sector. Amid lockdown-fuelled economic weakness and hot money flight from debt market, such foreign inflows would continue to make up for the bleeding of foreign exchange reserves. The country has seen an outflow of almost $2 billion under foreign investment in treasury bills during the last couple of months, along with around $150 million net outflow from the stock market.

The central bank’s data showed that net treasury bills’ selling position of foreign buyers stood at $73 million on April 6. Net buying was recorded at $1.2 billion so far this fiscal year. The SBP’s foreign exchange reserves slid more than 12 percent in three weeks of March. As of March 27, the reserves stood at $11.2 billion compared with $12.8 billion as of March 6.

“We expect the SBP reserves to fall to $8 billion by Jun 2020, if none of the above support materialises, as debt repayments over the next 3 months stand at around $4 billion,” brokerage Topline Securities said in a report. “We foresee a balance of payments issue over the next 3 12 months (even though current account balance will be more than manageable), if Pakistan is unable to muster reasonable support of the IMF, multilateral agencies and friendly countries.”