As per the State Bank of Pakistan’s latest data. remittances in April 2021 stood at almost $2.8 billion. while the month-on-month growth is flattish at 2 percent, the monthly inflows are up by 56 percent year-on-year in April 2021. Not only is it the highest monthly tally, remittances for 10MFY21 also stood at the highest ever for the country in similar period. At $ 24.2 billion for 10MFY21, remittances grew by 29 percent year-on-year, also crossing the full FY20 level by more than $1 billion.

The upward trend in remittances has continued through FY20 with FY21 particularly witnessing staggering growth. Remittances from the key host country, Saudi Arabia has climbed back up in FY21 after a period of slowdown amid its nationalization efforts. Similarly, inflows from expats in UAE too have grown in FY21 versus previous periods. Remittances from USA and the UK that saw a dip in FY20, has risen back in FY21 so far.

Drivers for the stunning 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, which shifted informal remittances to formal. Also, altruistic transfers to Pakistan amid the pandemic, orderly foreign exchange market condition also among the factors for growth as highlighted by SBP. The reasons for the sustained growth in remittances in Pakistan during the global pandemic have also been highlighted by the World Bank in its recent Migration and Development Brief include helping families back home; a shift in flows from informal to formal channels with greater use of digital remittance channels; and cyclical movements in oil prices and currency exchange rates (for more read: Remittance and its unwavering support). Growth in April inflows have been accentuated by Ramzan, Eid, Zakat and other charity related flows by expats.

So far so good. Remittances are expected to touch $29 billion in FY21 despite the effects of Hajj cancellation/ vaccine restrictions for Hajj as tax incentives to convert informal remittances to formal remittances will continue to bring in this precious foreign exchange.