Remittances hit all-time high of $23.12 billion in FY20

KARACHI: Remittances flowing into Pakistan jumped 6 percent to an all-time high of $23.120 billion in the full 2019/20 fiscal year as overseas workers were able to send money home after countries started easing COVID-19 lockdowns around the world, central bank data showed on Monday.

Pakistan had received $21.739 billion in the corresponding period of previous fiscal year. A senior analyst said the country is seeing a negative impact on remittances from the Middle East, United States and Europe in FY2020 as “most Pakistanis lost jobs and faced cuts in wages, especially in the Gulf countries, while some labourers have returned to the country”.

“These [remittances] are savings not wages that expatriate Pakistanis are sending home to their families and relatives,” the analyst added. The July-June FY2020 remittances remained in line with the State Bank of Pakistan’s (SBP) projection of $22.5-23.5 billion, but below the government’s $24 billion target.

Workers’ remittances surged by a significant 50.7 percent in June to reach a record high of $2.466 billion compared with $1.636 billion in June 2019.

Surprisingly, the inflow of remittances from Pakistani diaspora saw an increase of 7.8 percent during the March-June 2020 pandemic period compared with the corresponding period of 2019.

Among countries, the top remittance senders were Saudi Arabia ($5.432 billion), followed by the United Arab Emirates ($4.622 billion), the United States ($4.163 billion), and the United Kingdom ($3.465 billion).

During June 2020, larger amounts of workers' remittances were received from Saudi Arabia ($ 619.4 million), USA ($452.0 million), UAE ($431.7 million), and UK ($401.0 million).

However, analysts noted a surprise hefty surge in remittances that couldn’t maintain its pace in the current fiscal year. Faizan Ahmed, head of research at BMA Capital, said the numbers were “fantastic and surpassed expectations”.

“However, high numbers could be due to upcoming Eid-ul-Azha. I don't think such high numbers will persist in coming months as COVID-19 continues to stifle world economies.”

That said, however, it would be important to see how the numbers look like after Eid-ul-Azha. “On the positive side, higher than expected inflows could help rupee recover some of its lost ground against the greenback,” Ahmed said.

The SBP said in a statement the significant increase in remittances during June 2020 could be attributed to a number of factors. Since many of the countries eased lockdown in June, overseas Pakistanis were able to transfer accumulative funds, which they were unable to send earlier. “Further, it is also believed that they sent remittances to support extended families and friends due to COVID-19,” the central bank said.