Remittances rise 10.4pc to $5.36bln in July-August

KARACHI: Remittance inflows increased 10.4 percent in July-August, the central bank said on Friday, as incentives for migrants as well as banks and money transfer operators, along with digitisation and lower cross-border travel due to Covid helped expatriates send more money.

The remittance inflows amounted to $5.36 billion in July-August FY2022, up from $4.85 billion in the same period of last fiscal year. The State Bank of Pakistan (SBP) said in a statement that workers’ remittances continued their strong trend, reaching $2.66 billion in August 2021. These inflows stood at $2.09 billion in August last year. This is the sixth consecutive month when inflows recorded around $2.7 billion, on average, and the fifteen consecutive month they have been above $2 billion.

“In terms of growth, remittances increased by 26.8 percent (year-on-year) in August, which is a decade high growth rate for that month,” it said. “By contrast, on a month-on-month basis, inflows were marginally lower than in July, reflecting the usual post-Eid slowdown. Nevertheless, this seasonal decline was far less this year compared to historical trends,” it added.

Remittances were recorded at $2.70 billion in July.

Saudi Arabia, the United Arab Emirates (UAE), the United States (US) and the United Kingdom (UK) were the major sources of remittance inflows in July-August, according to the SBP’s data.

Pakistan received $1.33 billion in July-August FY2022, compared with $1.41 billion in the corresponding period of FY2021. These inflows saw a decline of 5.6 percent in two months. Remittances sourced from the UAE rose 10 percent to $1.04 billion.

Pakistani migrants working in the UK sent home $745.7 million in July-August FY2022, a 7.1 percent higher than the amount recorded a year earlier. Remittances from the US increased 30.6 percent to $591 million.

The Institute of International Finance (IIF) in a recent report stated that Pakistan’s external position had strengthened supported by the continued surge in remittances.

The deterioration in the trade deficit, on the back of the sharp increase in imports, has been offset by the continued surge in workers’ remittances, it said.

Remittances hit an all-time high of $29.4 billion in FY2021 driven by both domestic and international factors. Domestically, the authorities reduced the threshold for eligible transactions from $200 to $100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme, promoted the usage of formal and digital channels, and restricted cross border travel amid Covid-19.

Internationally, fiscal stimulus in developed and emerging economies enabled Pakistanis living abroad to send more money home, according to the IIF report.

Analysts expect remittances to face some slowdown in case international flights were fully resumed. However, the government was taking some measures to attract more remittances in the current fiscal year. The Economic Coordination Committee of the cabinet last month approved a budgeted subsidy of Rs13.103 billion for a reward scheme to sustain foreign remittances. It had also made Roshan Digital Account a part of the subsidy scheme.