Remittances top $2 billion for 10th month

KARACHI: Remittances from Pakistani workers employed abroad increased to $2.7 billion in March, a 43 percent rise year-on-year and up 20 percent compared to the previous month, the central bank showed on Monday.

Remittances remained above $2 billion for a 10th consecutive month mainly due to the increased use of formal channels and additional transfers by the migrants to support their families during the coronavirus pandemic. Remittances rose 26.2 percent to $21.5 billion in July-March FY2021, compared with $17.0 billion in the same period of last fiscal year. “Proactive policy measures by the government and SBP to encourage more inflows through formal channels, limited cross border travel in the face of the Covid-19, medical expenses and altruistic transfers to Pakistan amidst the pandemic, and orderly foreign exchange market conditions are continuing to contribute to this sustained rise in workers’ remittances,” the SBP said in a statement issued on the same day.

Most of Pakistan’s remittances are sent by the expatriates living in Saudi Arabia, United Arab Emirates, United Kingdom, and the United States of America. These inflows work as a pillar of support for the South Asian economy, which suffered an economic slowdown due to the pandemic. Remittances from Saudi Arabia increased 20 percent to $5.7 billion in July-March FY201.

Cash sent back to family members from Pakistani diaspora in the UAE was at $4.5 billion nine months of this fiscal year. That compared with $4.2 billion a year ago. The country received $2.9 billion from the UK, up 61.8 percent from a year earlier. Remittances from the USA rose 52.6 percent to $1.9 billion in July-March FY2021. Remittance inflows have been on a persistent rise since last year, as a growing number of Pakistani workers living in the Gulf, USA and Europe managed to send extra money to relatives back home to alleviate the devastating impact of the pandemic.

Pakistani migrants remitting home the money saved for international travel, especially religious travel such as Hajj and Umrah due to a sharp reduction in the number of Umrah and Haj visas to contain the outbreak. The transfers of accumulated savings by returning overseas workers also contributed to the rise in remittances flows to the country.

Strong workers’ remittances have been adding support to the current account, which remained in surplus of $881 million in July-February FY2021. However, the current account deficit narrowed 75 percent to $50 million in February. Remittance flows to Pakistan are expected to remain robust, despite an uncertainty around the global recovery amplified by the third wave of Covid-19. The dim prospects for growth and employment, and deteriorating conditions in the sending countries are unlikely to affect the remittance growth in the country. The seasonal factors of the holy month of Ramazan, and Eidul-Fitr festival would also likely help maintain the continual upward growth trajectory. Analysts expect workers’ remittances to rise to $27 billion this fiscal year. The International Monetary Fund in its latest report projects remittances to be $24.6 billion, close to the SBP’s projection of $24-25 billion for FY2021.