Remittances surge to record $18bn in 7 months

KARACHI: Remittances sent home by overseas workers roared to their highest in July-January of the current fiscal year, driven by government efforts to encourage the use of official channels to transfer money, the central bank said on Friday.

“During the first 7 months of FY2022, remittances have risen to a record $18 billion, 9.1 percent higher than the same period last year,” said State Bank of Pakistan (SBP) in a statement.

Remittances, a major source for the country’s foreign exchange reserves and support for the low-income families, stayed robust aided by the government incentives to the expats for sending money home through official channels and the crackdown on operators of illegal sources like hundi and hawala.

Besides, a growing number of the non-resident Pakistanis living in various countries sent extra money to families back home to overcome the impact of the pandemic, which also caused a surge in remittance flows.

These solid remittances have lent some support to external current account, contributed to the buildup of forex reserves, and helped decrease the government’s external financing requirements.

The inflows mainly sourced from Saudi Arabia, United Arab Emirates, United Kingdom, and the United States, the SBP’s said.

Remittances from Saudi Arabia rose 1.5 percent to $4.574 billion in July-January FY2022.

Pakistani citizens working in the UAE sent home $3.382 billion in the period under review. That compared with $3.443 billion in the same period last year.

Remittances from the UK rose 13.2 percent to $2.467 billion. The money sent home by migrant workers in the US stood at $1.701 billion, compared with $1.406 billion a year ago.

However, cash sent back to family members from overseas Pakistanis in January fell 5 percent year-on-year to $2.1 billion. This is the lowest monthly remittances after August 2020, according to analysts. The inflows slumped 15 percent month-on-month.

The SBP attributed a decline in January's remittances to easing of travel restrictions and seasonal factors.

During the month, remittances from UAE posted a significant decrease, while those from UAE also fell 23 percent to $374 billion. Inflows decreased 18 percent on a month-on-month basis.

Analysts expect remittances to exceed $30 billion mark in FY2022.

The SBP together with the government has introduced various policy measures, from time to time to enhance the flow of home remittances through formal channels.

Recently, it has offered incentive of Re1/dollar to exchange companies for surrendering 100 percent remittances in the interbank market.

The SBP expects this incentive will encourage exchange companies to bring more and more home remittances into the financial system.