Remittance inflows jump by 24pc in Feb to $2.3 billion

KARACHI: Remittance inflows into Pakistan jumped by nearly 24.2 percent in February to $2.266 billion as government incentives attracted people abroad to send more money home through formal channels, the central bank reported on Thursday.

Workers’ remittances reached an unprecedented level of $18.7 billion in the eight months of the fiscal year, up 24.1 percent, compared with the same period a year ago.

“Policy measures undertaken by the government and SBP (State Bank of Pakistan) to encourage inflows through formal channels, limited cross-border travel due to COVID-19, medical expenses and altruistic transfers to Pakistan amid the pandemic, and orderly exchange market conditions, contributed to this sustained rise in workers’ remittances,” the SBP said.

Remittances continued exceptional performance and remained above $2 billion for the ninth consecutive month in February.

“Remittances in February are maintaining the momentum, which is positive and the much-needed to support the country's external account as exports continue to remain sticky at $2 billion while international oil prices have shown the strength of late,” said Saad Hashemy, an executive director at BMA Capital.

The SBP’s data showed that a large part of remittance flows in July-February 2021 came from Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States.

Inflows from Saudi Arabia, the major remittance source for the country, increased 19.5 percent to $5 billion in July-February 2021.

Pakistani citizens working in the UAE sent $3.9 billion in July-February, compared with $3.7 billion in the corresponding period of the last year, showing a 6 percent increase year-on-year.

Remittances from the UK rose 56.8 percent to $2.5 billion. The inflows from the US increased 46.7 percent to $1.6 billion. Pakistani diaspora has defied pandemic blues with the record surge in remittances. They travelled less to Pakistan and continued to send savings back home in the tough times of the COVID-19.

Analysts expect an upward trend in key non-debt creating foreign exchange inflows that are remittances to continue in the coming months, as restrictions on international travel may be extended due to the surging cases of the virus in several countries.

The seasonal factors such as Ramazan and Eid-ul-Fitr, which are coming, could also lead to a rise in remittances. The overseas Pakistani workers send more money to their families to meet expenses in the holy month of Ramazan and Eid festive.

“We believe remittances would increase 19 percent YoY in FY21 to $27.6 billion given prolongation of travel restrictions amid a resurgence of COVID,” an analyst at Foundation Securities in a client note said. The government and the central bank’s initiative to attract remittances through the Roshan Digital Accounts from non-resident Pakistanis is also supporting remittances.