As expected, the home remittances in August 2019 witnessed a dip. The decline of 17 percent month-on-month was seen as a post Eid ul Azha effect, which is a general trend seen every year. Remittances have been up month-on-month in the past few months on account of Ramazan, Eid-ul-Fitr, and Eid-ul-Azha.
However, the decline remittances in August 2019 are not just the after-Eid effect; August 2019 remittances also fell by 19 percent year-on-year, which was partially because of the massive currency depreciation. With over 40 percent decline in currency value, overseas Pakistanis have been able to send in lesser foreign currency back home for the same about of domestic currency, which is why remittances usually shown in USD have registered a decline.
Remittances in the first two months of FY20 have also seen a decline of around 8 percent year-on-year. Share in total remittances from key corridors like Saudi Arabia and UAE have been on a decline with continued weakening in their economies, changing dynamics and falling labour exports to these countries. In 2MFY20, remittances from Saudi Arabia were however seen to improve slightly from 22 to 23 percent as its share in total remittances. Similarly, inflows from USA were seen to increase in share from 15 to 17 percent in 2MFY20. However, share of remittances from other regions either declined or remained static in the first two months of FY20.
Though PRI and the SBP have been working hard on new tie ups across various regions especially the West and the European countries, regaining Saudi Arabia is an important task, which should not be neglected. Remittances that were once secondary to foreign direct investment are now becoming the key and the top source of foreign inflows. It is not just Pakistan where remittance has become a stable source of foreign currency in its balance of payment position; all around the world, developing countries have been banking on remittances to boost their current accounts.