Remittance inflows jump by 12.5pc in July-Sept to $8bln

KARACHI: Remittances sent to Pakistan, a major support for the country's economy and in particular for low-income families, rose by nearly 12.5 percent year-on-year to $8.0 billion in the first quarter of the current fiscal year, the central bank data showed on Friday.

The country received $2.7 billion in remittances in September, versus $2.66 billion a month earlier and $2.28 billion in September 2020. In terms of growth, remittances increased by 16.9 percent year-on-yera in September, while on a month-on-month basis inflows were inching up by 0.5 percent.

“Workers' remittances continued their strong momentum and remaining above $2 billion since June 2020, the State Bank of Pakistan (SBP) said in a statement. “This is the 7th consecutive month when inflows recorded around $2.7 billion on average.”

Flows of remittances maintained an upward trend since last year due to the measures taken by the government and the SBP to encourage the use of official channels, reduced cross-border travel in the wake of the Covid-19 altruistic transfers to Pakistan during the pandemic.

Furthermore, workers abroad are also likely to take advantage of the recent slide in the domestic currency, which dropped to 171 against the dollar on Wednesday. It depreciated by 8.32 percent during July 01-October 6, 2021.

“Exchange rate depreciation might have helped remittances as expats get more value for their money. Moreover, digital means of transferring money and the government's efforts to control money laundering have helped increase remittances,” said Samiullah Tariq, the head of research Pak-Kuwait Investment Company.

Most of the money sent to Pakistan came from Saudi Arabia followed by the United Arab Emirates, United Kingdom, and the United States.

Pakistani citizens employed in Saudi Arabia sent home $2.02 billion in July-September FY2022, compared with $2.08 billion in the corresponding period of last year.

Remittances from UAE rose nine percent to $1.54 billion from $1.42 billion. Inflows received from the UK stood at $1.11 billion, compared with $985 million last year.

The country fetched $836 million in remittances from the USA in July-September FY2022, up 32 percent from a year earlier. Workers’ remittances have provided support to the current account deficit and the private consumption, especially for low-income people, who are in the dire need of receiving such transfers.

The current account deficit remained at a higher trajectory on the back of increasing imports and the country’s sluggish ability to attract foreign direct investment inflows. The current account gap is expected to come in at 2-3 percent of gross domestic product FY2022 as the trade deficit surges.

Analysts see the remittances to remain resilient even after the opening of flights as people feel that formal channels of sending money are secure and convent.