Remittances – the splendid growth streak persists.

As per the State Bank of Pakistan’s official data. remittances in March 2021 stood at $2.725 billion, up by 43 percent year-on-year, and by 20 percent when compared to February 2021. On the whole, remittances increased by 26.2 percent year-on-year in 9MFY21 to over $21 billion. The period has been even better than FY19 with growth of over 34 percent in FY21versus FY19.

Majority of the remittances come from 4 key destinations (70 percent) – Saudi Arabia, UAE, US, and UK (70 percent) while another 20 percent is sourced from other GCC countries and the Europe. This trend has been holding up in Covid-19 pandemic as well going against the once feared consequence of decline in inflows from Saudi Arabia amid its nationalization efforts.

Given how remittances have continued to ascend during the last nine months, it is safe to assume that FY21 will be a record year for these foreign inflows. For straight ten months, remittances from Pakistan diaspora abroad have been above the $2 billion threshold, which if continues for another three months would take the tally to at least $27 billion in remittances. The assumption is plausible as remittances often pick further pace during the Holy month of Ramzan and peaks near Eid-ul-Fitr.

Factors behind the staggering growth in remittance have a lot to do with formalization efforts and curb on illegal and informal channels. COVID-19 brought with itself limited cross border travel; and not only have the funds come in through formal channel, but the central bank highlights also that the rise in medical and altruistic transfers have contributed to the sustained rise in remittances during the fiscal year so far.

Not only do all these factors are likely to contribute to the remittance inflows in the coming months as the world is engulfed in the third wave of the infection (including Pakistan), the rising value of Dirham will also act as a push for overseas residents to sending more money back home. And as per channel checks, the launch of Roshan Digital Accounts is also playing its role in the foreign exchange growth. Over $800 million has come via Roshan Digital Accounts (RDA) up till now mostly from UAE, which is making UAE a key contributor to the country’s remittances currently as well as in the coming months.