KARACHI: Inflows of workers' remittances continued to post strong growth, surging by 31 percent during the first quarter of this fiscal year (FY21), mainly due to resumption of normal business activities in major remittance sources such as Middle East, Europe and USA.
According to the State Bank of Pakistan (SBP), workers' remittances remained above $2 billion for the fourth consecutive month in September. Home remittances sent by overseas Pakistan increased by 31.2 percent or $544 million to $2.283 billion in September 2020 compared to $1.74 billion received in the same month of the last fiscal year. Workers' remittances in September are also 9 percent higher than August, in which $2.09 billion inflows were arrived.
The inflows of remittances in September were slightly higher than SBP's projections of $ 2 billion. "This is because of efforts under the Pakistan Remittances Initiative (PRI) and the gradual re-opening of major host destinations such as the Middle East, Europe and the United States contributed to the sustained increase in workers' remittances" the SBP mentioned.
On a cumulative basis, remittances rose to a record $7.147 billion in July-Sep of FY21 compared to $5.45 billion in corresponding period of last fiscal year, depicting a strong growth of 31.1 percent or $1.65 billion.
Khurram Schehzad, an economist, said that remittances, which were previously coming through unofficial channels, now coming through official channels due to limited travel during Covid-19.
He said that there is little or no economic growth in the Middle East, where from about 60 percent of Pakistan's, Bangladesh, and India's remittances generates. Therefore, the reason for this growth is that now the remittances are coming through banking channels instead of Hundi/ Hawala not just in Pakistan, but also some other countries like Bangladesh, which are also experiencing higher growth in remittances, he added.
Schehzad said that the post Covid-19 scenario will reveal how this growth in remittances will sustain, and if the workers go back to their jobs aboard.
According to SBP's statistics Saudi Arabia, US, UK and UAE are four major corridors of workers' remittances and all these sectors posted healthy growth during the first quarter of this fiscal year.
Saudi Arabia is the largest contributor with 29 percent share in overall inflows of home remittances during July-Sep of FY21. Inflows from Saudi Arabia mounted up by 34 percent to $2.08 billion.
Worker's remittances from the US and UK posted 63 percent and 71 percent growth to reach at $633 million and $985 million respectively in the first quarter of FY21. In addition, inflows from UAE surged by 8 percent to $1.4 billion in the first three month of this fiscal year.
Since June Pakistan is receiving over $2 billion home remittances monthly. In June, remittances amounted to $2.47 billion were arrived, while the country received highest-ever workers' remittances $2.76 billion in July and $2.09 billion in August.
Copyright Business Recorder, 2020
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