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Remittances comeback

According to the State Bank of Pakistan (SBP), Pakistan’s remittances from overseas workers were increased 24 percent to $2.039 billion in the first month of FY2019-2020 from $1.645 billion in the last month. However, statistics also showed that July remittances were recorded slightly higher than the corresponding period previous year, when Pakistani expatriates sent home $1.981 billion. A monthly rise in remittance flows reflects economic recovery in source markets and the government’s attempts to encourage overseas Pakistanis to remit through legal means.

Moreover, it is said that overseas Pakistanis sent home more remittances to their families to buy sacrificial animals on Eidul Azha. Remittances are a significant part of our foreign exchange reserves and an essential role in building financial resilience for the country. Statistics also show that $21 billion worth of remittances received during FY2018-2019 came close to Pakistan’s total export receipts. Furthermore, country-wise statistics also showed that Pakistani workers living in the United States of America (USA) sent home $332.37 million during July 2019, or 20 percent above the $276.76 million sent in the last month. Remittances from the United Kingdom (UK) increase to $299.27 million during July from $268.98 million in June. The country fetched $470.95 million from Saudi Arabia during July, as against with $333.99 million in June. Remittances from the United Arab Emirates (UAE) rose to $427.33 million from $356.03 million. Pakistani workers living in the GCC countries sent home $198.06 million, as against to $163.46 million sent in the last month. Furthermore, the country attracted $160.36 million from Malaysia. These inflows stood at $113.20 million during June 2019.

Economists identified that remittances could keep pace and sustain an upward trend during the current fiscal year. The SBP expects the government’s attempts taken under PRI (Pakistan Remittance Initiative) to support the higher remittance flows in the FY2020. SBP also permitted exchange firms to start working directly to attract remittance inflows from countries with nominal share. However, the present Middle East government’s move to sack Pakistani doctors with MS degrees might have some pessimistic impacts on remittances. Statistics also show that remittances to Pakistan rose 9.68 percent to $21.841 billion in the previous fiscal year, as against with the last year.

 

Workers’ remittances in Pakistan (Million US Dollars)
ItemJan-19Feb-19Mar-19Apr-19May-19Jun-19FY19Jul-19
I. Cash Flow1,744.081,581.731,743.311,778.902,315.741,645.7110,809.472,039.30
1. USA272.49241.00268.57269.56346.81276.761,675.18332.37
2. U.K.295.17252.49281.54280.02387.09268.981,765.28299.27
3. Saudi Arabia403.92370.04405.88427.82493.73333.992,435.37470.95
4. U.A.E.349.68336.02378.11372.43476.57356.032,268.84427.33
5. Other GCC Countries166.50152.25167.84175.44237.76163.461,063.26198.06
6. EU Countries42.8937.7144.2548.1970.6152.49296.1558.30
7. Malaysia120.21109.85121.27123.96175.91113.20764.40160.36
8. Norway3.492.953.282.945.273.8221.754.01
9. Switzerland1.721.721.852.295.221.6814.481.66
10. Australia19.2016.5417.8919.0329.6116.10118.3718.72
11. Canada15.9914.5314.9617.7330.9914.94109.1415.08
12. Japan1.301.401.571.915.811.7513.732.31
13. Others Countries51.5045.2336.3037.5850.3742.51263.4950.87
II. Encashment and Profit in Pak. Rs. of Foreign Exchange Bearer Certificates (FEBCs) & Foreign Currency Bearer Certificates (FCBCs)0.000.000.000.000.000.000.010.00
Total (I+II)1,744.081,581.731,743.321,778.902,315.741,645.7110,809.482,039.30
Source: SBP
Conclusion

No doubt, the sacked Pakistani doctors and health professionals in Saudi Arabia would surely dent remittance flows, but its impact will likely be very small. However, it has been believed that the high transaction costs of remitting money from abroad are still acting as major obstacle to further remittance flows.

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