Many economists advise that the remittances are the second largest source of financing after Foreign Direct Investment (FDI) in developing countries. In recent years, they have gained significant importance for their role in balance of payments. They have also urged that there has been growing interest in workers’ remittances as a tool for development and economic growth.
According to the present report of State Bank of Pakistan (SBP) overseas Pakistani workers remitted $1.65 billion in April 2018, falling 6.89 percent from March 2018. However, the amount was up 7.25 percent from the corresponding month of last year. SBP reported that total remittances for the first 10 months (July-April) of the FY2017-18 amounted to $16.2 billion, 3.92 percent higher than $15.6 billion in the same period of previous year.
The SBP’s present quarterly report showed on the state of economy that Pakistan would attract a maximum of $20.5 billion in remittances during FY2018. If its projection is met, then total remittances will be slightly higher than last year’s number of $19.3 billion, but will decline short of the target of $20.7 billion. The slight pickup in remittances, however, was insufficient to offset the impact from excessive imports and an unsatisfactory rise in exports. As a consequence, statistics revealed that Pakistan’s current account deficit continued to enlarge and the gap widened 50.6 percent yearly to $12.03 billion in first 9-months of FY2018, eating up foreign exchange reserves at a fast pace.
Statistics showed that Saudi Arabia remained the single largest source of remittances to Pakistan, but inflows slowed down. Pakistanis living in the Gulf Arab kingdom sent home $399.56 million last month, which was 9.01 percent lower than $439.13 million in the corresponding month of previous year. Economists said that remittances into Pakistan constituted 7 percent of GDP for 2017. The country was ranked amongst the top five lowest cost corridors for sending remittances to South Asia i.e. Kuwait to Pakistan but was positioned at 2nd (Pakistan to Afghanistan) and 3rd (Pakistan to Bangladesh) respectively for amongst the 5 highest cost corridors.
SBP report also noted that Pakistanis living in UAE sent home remittances worth $358.28 million, which was 4.15 percent higher than $344.01 million during April 2017. On yearly basis, remittances from the US and the UK picked up from $199.69 million and $191.6 million to $240.39 million and $232.58 million respectively in April 2018. Remittances from GCC countries, including Kuwait, Bahrain, Qatar and Oman, amounted to $167.68 million, which was 4.2 percent lower than the $175.18 million remitted in April 2017.
Pakistani workers in EU member states remitted a total of $54.74 million, which remained higher on a yearly basis, but dropped 7.05 percent month-on-month. Pakistan was also among the top 10 origin countries list of international migrants in 2017, with statistics registered at 6.1 million. As per the World Bank’s (WB) Remittances and Migration report, Pakistan was ranked at 2nd among top host-countries for refugees with a statistic of 1.4 million, only eclipsed by Turkey which was number one with 3.2 million for the first-half of 2017.
World Bank report also mentioned that the deployments of Pakistani workers to Saudi Arabia in the first six months of 2017 was just 17 percent of the total workers who went to the kingdom during 2016 (77,600 in January–June 2017 vs 462,598 in 2016). It has been revealed that the Kingdom presently placed restrictions on the recruitment of 12 categories of foreign workers.
World Bank also predicted that the growth to continue during 2018, estimating it to reach $485 billion by end of 2018. And international remittances are estimated to increase 4.6 percent, standing $642 billion during 2018. The report also proclaimed that the international lending agency warned longer-term risks to the growth of remittances remained, which could include stricter immigration strategies in various remittance source nations.
It is also mentioned that SBP said the actual balance of payments statistics explicated that outflow of workers’ remittances from Pakistan to India were $116,000 in FY2016 and the inflows from India to Pakistan were $329,000. The value of Pakistan’s exports to India was $425 million, while imports from India amounted to $1.415 billion during FY2016. While World Bank report also revealed that during 2017, India received $69 billion in remittances, higher than any other country. This is also higher than the earlier World Bank prediction of $65 billion and marks a nearly 10 percent rise over the last year. During 2016, remittances fell nearly 9 percent. The 2017 fact is, however, still below the register of $70 billion received during 2014.
Economic experts, however of the view that India has the largest number of residents living abroad, which assists keep the country at the top of the pecking order. Overall, low and middle-income states such as India received register overseas funds of $466 billion. The inflows to high-income states enhanced from $573 billion a year earlier to $613 billion during 2017. Meanwhile, the monthly outbound remittances by Indians are also rising steadily and touched a record high of $1.2 billion in January 2018. The amount is rising because more people are spending on foreign trips and education.