Remittances increase 6pc to $18.8bln in July-April

KARACHI: Workers’ remittances increased around six percent to $18.8 billion in the first 10 months of the current fiscal year of 2019/20, the central bank’s data showed on Monday, but foreign inflows are expected to decline amid pandemic-driven global economic slowdown.

The State Bank of Pakistan (SBP) said the workers’ remittances increased $980.6 million from $17.8 billion in the corresponding period a year earlier.

In April, remittances amounted to $1.79 billion, recording a decrease of $104.4 million, or 5.5 percent, over remittance received during the previous month of March. There was a 1.1 percent increase in April from $1.77 billion in the corresponding month a year earlier.

The World Bank expected remittances to Pakistan to fall in the current fiscal year compared with $22.5 billion in the preceding fiscal year due to global economic crisis caused by the COVID-19 pandemic and oil fall.

The COVID-19 might cause a significant drop in remittances since all the four major countries – Saudi Arabia, UAE, US and UK – from where 80 percent of the total remittances are received reeled from the coronavirus lockdown. Alone Saudi Arabia and UAE account for 60 to 70 percent of remittances inflows in Pakistan. Oil producing economies are facing decade-worst oil price crash.

In April, larger amounts of workers’ remittances ($451.4 million) were received from Saudi Arabia, followed by USA ($401.9 million), UAE ($353.8 million) and UK ($226.6 million), recording an increase of 14 percent for USA, whereas a decrease of 0.2 percent, 15.8 percent and 8.8 percent for Saudi Arabia, UAE and UK respectively as compared to March, the SBP said.

Pakistani workers living in Saudi Arabia sent home $4.3 billion in July-April FY2020, compared with $4.1 billion in the corresponding period of FY2019. Remittance from the USA rose 21.3 percent to $3.282 billion in July-April period. Pakistan attracted $2.7 billion from the UK, compared with $2.7 billion last year. Remittances from the European Union countries rose 6 percent to $515.2 million. Remittances from UAE stood at $3.9 billion, compared with $3.7 billion last year. From gulf cooperation council countries, the inflows amounted to $1.7 billion, up 3.6 percent year-over-year.

Workers’ remittances showed a 4 percent year-on-year increase in the monthly average till January.

Remittances grew at a compounded annual rate of nearly nine percent during five years (2012/19), with inflows mainly coming from gulf cooperation council countries – 54 percent of total remittances in 2019 –, followed by the US (16pc), the UK (16pc) and Malaysia (7pc). Remittances have grown even more, in terms of local currency, because the rupee depreciated more than 40 percent over this period.