Remittances show steady growth

Workers’ remittances delivered yet another month of healthy growth. The State Bank data shows that overseas Pakistanis sent $1.21 billion in April, which is a growth of 8.6 percent over March. The monthly remittance figure also posted year-on-year growth of 6.5 percent. Remittance proceeds from all major destinations, Saudi Arabia, UAE, UK and US, have showed an increase over the March tally.
The data shows that remittances received during the 10-month period April 2013 reached a high of $11.56 billion, showing 6.3 percent increase over the same period last year. That translates into an additional $693 million in foreign exchange received by Pakistan over the previous year’s 10-month tally.
During 10MFY13, rising remittance inflows have been recorded by the State Bank from overseas Pakistanis residing in countries such as the United Kingdom, Saudi Arabia, Abu Dhabi, Bahrain, Kuwait, Qatar, Oman and Australia. However, proceeds have shown declines over previous year from remitters in the US, Dubai, Sharjah, and some EU countries.
Saudi Arabia and US are the top two remittance origins for Pakistan. Since FY10, Saudi Arabia has edged ahead of the US in terms of its contribution to total remittance inflows in Pakistan. In 10MFY13, remittance proceeds from Saudi Arabia were about 29.1 percent of total remittances received by Pakistan, whereas the US remittances were 15.7 percent. The changing employment conditions for immigrants in the two countries are expected to impact remittance outflows to Pakistan in the future.
Healthy growth in the April inflows helped improve the average monthly remittance figure in 10MFY13. It reached $1.15 billion, up from the $1.08 billion average monthly receipts for the same period last fiscal year. At this pace, remittance inflows for the entire fiscal year might touch $14 billion, an all-time high in Pakistan’s history.
The remittance growth has been robust in recent years, though the growth rate has slowed down in FY13 relative to previous year. The incremental remittance inflows, however, have been major reprieve to the foreign exchange reserves that are under pressure due to IMF debt repayments. Amid thin FDI inflows, the country has found a reliable fallback in the overseas remittance proceeds.