Sustaining remittances

A good start to FY20, worker remittances for July 2019 as per SBP’s recently released data has risen by 8 percent on a year-on-year basis and by 41 percent month-on-month. Growth in July 2019 inflows was expected as the overseas Pakistanis have been seen to send in more money during holy occasions and holidays.

Recall that FY19 growth in worker remittances grew by 9.7 percent year on year crossing $21 billion foreign inflows for the year, and surpassing the target set by the central bank. There is no new narrative for country-wise remittance inflows except for the fact that while the share in total remittances from key corridors like Saudi Arabia and UAE has been on a decline with continued weakening in labour exports to these countries, remittances from these source countries recovered in FY19 after posting a decline in FY18. In July 2019 as well, remittances from Saudi Arabia grew by 8 percent year-on-year; however, inflows from UAE were down by 4 percent.

But the prospects going forward might not be optimistic. Though remittances from Saudi Arabia and UAE were up by 41 and 20 percent, respectively on a month-on-month basis, the increase was mainly due to seasonal inflows ahead of Eid. And the latest unfortunate turn of events where Saudi Arabia has sacked Pakistani doctors and other health professionals could spell trouble for the money sent back from Saudi Arabia. While the quantitative impact of the move is difficult to assess right now due to data limitations (Read: Will sacked doctors in Saudi dent remittance flows?), sacking professional Pakistanis working abroad is a significant blow for the country, and is likely affect remittances.

PRI, the central bank and the government has been working on new tie ups to encourage remittance flow through formal channels. Maybe it’s time that some attention is also diverted to labour exports and their skillset. For long, the country’s labour exports have been primarily that of unskilled and semi-skilled workers in the Middle East.

But it’s high time that the manpower export moves with global demand – be it for unskilled, semi-skilled or skilled professionals. It would get messy if the issue of sacking spreads to other professions and other countries.