Statistics showed that during November 2019, overseas Pakistani workers sent $1.81 billion as 9.35 percent higher remittances, which helped improve the country’s ability to make import payments and repay foreign debt. In the same month of the previous year, remittances stood at $1.66 billion, the State Bank of Pakistan (SBP) announced. For a very long time, remittances have existed. Despite the fact, remittances have become a big trend of international financial transfer in these current years. For many initiatives in developing countries, remittances are becoming a primary source of funding. It has been explained in various ways such as monetary payments transferred between people or organizations. Remittances have also been urged as transfer of money from family members to recipients in other countries. Different sources mentioned remittances as the accounting concept of monetary payment transferred by a customer to a business.
|Month-Wise Workers’ Remittances (Million US Dollar)|
|Monthly Cash Inflow (including FEBCs & FCBCs)||FY20||FY19||FY18||YoY growth (%)|
In Pakistan, improved inflows in the month improved the overall remittances attained in the first five months (Jul-November 2019) of the current fiscal year to $9.29 billion, which was slightly better as against to $9.28 billion in the same period of the last year. Statistics showed that remittances were moderately low in the first few months of the current FY20. However, November has covered the gap for the first five months. Overseas Pakistani workers remitted $9,298.57 million in the first five months of FY20, as against to $9,281.94 million in the corresponding period of the preceding year. The experts calculated that remittances for the full fiscal year may end up with 3-4 percent growth to over $22 billion. This would, however, be lower than the target of 10-11 percent growth to over $23 billion for the year.
It is also calculated that the current account balance had turned into a surplus in October after a gap of 4 years and a similar trend was predicted in November. Therefore, the dramatic shift to surplus from the deficit seen in last month suggests Pakistan would not be in difficulty if the remittances remain slightly lower than the target for FY20.
The International Monetary Fund (IMF) projection suggests the country will record a current account deficit of $6.5 billion in FY20. If the current account balance comes to zero or goes into surplus in November, the deficit for the first 5-month would be approximately $1.1-1.2 billion. This trend suggests the deficit for the full fiscal year should be lower than $5 billion against the target of $6.5 billion. The predicted drop in the current account deficit would make up for any slowdown in the remittances.
Statistics also revealed that remittances from Saudi Arabia, which remains the largest source of remittances for Pakistan, were moderately better but may have remained under pressure. Challenges to the Saudi Arabian economy because of low crude oil prices may impact the flow of remittances to Pakistan. However, remittances from the UAE, which was also a significant source, were much better as its economy did not completely depend on oil exports, which was diversified. Furthermore, remittances from the US and UK also enhanced notably. The rise suggests people are fast adopting legal channels, mostly banks, for sending their remittances as the country has introduced a crackdown on the unlawful Hundi/Hawala system.
According to the State Bank, country-wise figures for November 2019 explained that inflows from Saudi Arabia worth to $407.48 million as against with $395.12 million in November 2018. Overseas Pakistani workers sent $383.77 million from the UAE in the month as against to $350.35 million in the same month of previous year. Expatriate Pakistanis in the US sent $298.64 million as against to $268.32 million. They sent $285.56 million from the UK as against to $246.78 million previous year. Remittances from Gulf Cooperation Council (GCC) countries – counting Bahrain, Kuwait, Qatar and Oman – came in at $172.25 million as against to $153.51 million in the last year. People from European Union member countries sent home $52.76 million as against to $42.22 million remitted a year ago. Statistics showed that remittances received from Malaysia, Australia, Canada, Japan, Norway, Switzerland and other countries in November 2019 worth to $219.19 million as compared to $207.74 million in November 2018. Furthermore, according to SBP, Pakistan will miss the economic growth target of 4 percent as two major sectors (agriculture and industries). Achieving the real GDP growth target of 4 percent appears unlikely, the SBP said in its first-quarter (Jul-Sept FY20) report on the state of Pakistan’s economy released. Earlier, the central bank projected GDP growth in the range of 3-4 percent, most likely 3.5 percent, in FY20. Such projection is, however, missing in the latest quarterly report, thus, strengthening doubts about economic slowdown to 2.4 percent in the year.