Finally, some good news on the macro front! Remittances sent home by overseas Pakistanis rose a decent 13 percent in the first two months of FY18. August alone saw an inflow of $1.9 billion, which is the highest inflow since June 2016, and second-highest monthly flow in the history of officially recorded monthly remittance data by the central bank.
But don’t get too excited too soon. Anyone following seasonal trends in remittances flows knows well that remittance inflows usually drop in the Gregorian month immediately following the month in which Eid-ul-Azha falls. If those historical trends still hold true – and as such there is no reason to believe otherwise at the moment - then a drop in the remittances in September appears inevitable. The real test of remittance flows will begin October onwards.
As for Jul-Aug data, year-on-year incremental flows in the fiscal year to date stands at $407 million. Of that, the UK and the UAE contributed the most towards incremental flows, which can be attributed to PRI’s efforts.
In an interview with BR Research, the PRI head informed that in the UK they had approved a host of agency arrangements. “To give confidence to the existing tie ups that the Pakistani market welcomes you, we brokered their relationship with Pakistan banks, and encouraged them to have joint promotions and marketing campaigns in the UK,” said Mr. Moinuddin (See Brief Recording section August 7, 2017 for full interview)
These campaigns were in addition to the ones held in the UAE, where partnering banks sponsored cricket matches in labour camps during Ramadan amongst other marketing efforts aimed at boosting remittances.
The PRI head maintained last month that the FY18 target of $20.7 billion will be met, thanks to their efforts to increase outreach in traditional and non-traditional corridors, and also increase the use of technology such as online transfers from sending corridors, and direct account credit/mobile wallets at receiving end.
That, plus investment products such as diaspora bonds, scheduled to be launched sometime in the second half of FY18, should help attract some flows in the short to medium term. But in the long term, it is the quantity and quality of labour exports that will matter; and labour exports as this column flagged at the start of this week, are currently losing steam.
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