Remittances jump 27% to $2.65 billion in August

KARACHI: The inflow of workers’ remittances into Pakistan increased by 27% — which is a decade-high growth rate for the month — to $2.65 billion in August, compared to $2.09 billion in the same month of the previous year.

This was the sixth month in the past 15 months when the inflows of remittances sent home by overseas Pakistanis remained around $2.7 billion. Moreover, August was the 15th successive month in which receipts remained above the threshold of $2 billion, the State Bank of Pakistan (SBP) reported on Friday.

The country saw robust growth in workers’ remittances in the wake of COVID-19, as restrictions of international travelling to contain the disease encouraged overseas Pakistanis to send remittances through banking channels.

Previously, some non-resident Pakistanis sent money through illegal channels of hundi-hawala operators, as they paid a comparatively better exchange rate in Pakistani rupee in the country.

Speaking to Geo.tv, Pakistan-Kuwait Company Head of Research Samiullah Tariq said: “Usually remittances are low in the post-Eid month, however, this time the inflows remained strong.”

Shedding light on the reason behind a 27% year-on-year increase, the analyst said that the incentives provided by the central bank and digitisation “encouraged expatriates to use formal money transfer channels”.

The analyst expects the workers’ inflows to stay strong, going forward. “The central bank will hopefully meet the target set for FY22,” Tariq added.

On a month-on-month basis, the inflows were marginally lower by 2% during the month under review compared to July 2021, the central bank reported.

“The marginal month-on-month decline was a reflection of usual post-Eid slowdown,” Pakistan’s central bank said in a statement on remittances.

Cumulatively, in the first two months (July-August) of the current fiscal year, remittances grew 10.4% to $5.36 billion compared to $4.85 billion in the same period of last year.

The workers’ remittances surged by a strong 27% to an all-time high of $29.4 billion in FY21, surpassing the previous record high of $23.1 billion received in FY20.

“Proactive policy measures by the government and SBP to incentivise the use of formal channels and curtailed cross-border travel in the face of COVID-19 have positively contributed towards the sustained improvement in remittance inflows since last year,” the SBP said.

It added that altruistic transfers to Pakistan amid the pandemic and orderly foreign exchange market conditions lent further support.

The central bank expects remittances to remain strong and improve in the current fiscal year 2021-22.

Country-wise remittances

Country-wise data reveals that inflows from the Kingdom of Saudi Arabia (KSA) increased by 17% to $694.2 million in August compared to the same month of last year. They improved 25% to $512.3 million from the United Arab Emirates (UAE).

Inflows surged 38% to $279.2 million from the United States of America (USA) while remittances grew 17% to $352.8 million from the United Kingdom (UK).

Moreover, remittances from other GCC countries increased 27.9% to $289.2 million and a 75.25% increase was recorded in inflows from European countries, which clocked in at $291.8 million in the month under review compared to the same month of last year.