Remittances to Pakistan from overseas Pakistanis crossed $29 billion, the highest ever in the country’s history registering a growth of 2 7percent year-on-year as per SBP’s latest data. The annual growth percentage is of key importance as unlike other sectors, remittances did not grow from a low base; remittances have been on an upward trajectory over the last 15 years - barring a slight dip in FY17 - and stood over $23 billion in FY20 (up by 6.4%YoY).
Remittance in Jun-21 were higher by 8.7 percent year-on-year and by almost 8 percent month-on-month. Continuously staying above $2 billion for 13 months straight, June growth came despite the cancellation of Hajj, where seasonal pre-Eid related inflows helped boost remittances level during the month. The month-on-month growth in FY21 particularly shows an elevated monthly trend throughout the year.
Remittances from the key host country, Saudi Arabia had climbed back up in FY20 after a period of slowdown amid its nationalization efforts. The dollar-increase in inflows from KSA continued in FY21, albeit at a slightly slower pace. The same trend was witnessed in remittances from UAE and other GCC countries. However, remittances from USA and the UK that saw a huge dip in FY20, witnessed reversal in FY21.
The pandemic did not have as much of a negative impact on the global remittance initially predicted. When the world was hit by COIVD-19, policymakers were quite dreary about remittances’ resilience. However, the opposite happened, and remittances were the most resilient of all foreign flows. The drivers of growth for remittances into Pakistan are shared by other countries in the region as well. Governemnt level efforts for formalization and curbing illegal channels; limited cross border travel to shift informal remittances to formal; and altruistic and religious transfers amid the pandemic have also been seen in Bangladesh where remittance inflows hit a record high of $24.7 billion – a growth of staggering 36 percent year-on-year.
A highlight for global remittances in the last year and half of the pandemic is that COVID-19 has brought digital revolution in remittances. Government incentives and initiatives global have been hinged to the use of digital financial services and formal channels, which has acted as a key driver for defying the otherwise bleak expectations at the begin of the pandemic.