The inflow of workers’ remittances into Pakistan hit an eight-month high at $2.72 billion in March 2021 ahead of the start of Ramazan.
The robust inflows have improved the country’s capacity to make international payments, mainly for imports and foreign debt servicing, and build its foreign currency reserves.
March also became the 10th month in a row when remittances sent home by overseas Pakistanis stayed above $2 billion.
Workers’ remittances increased 43% to $2.72 billion in March compared to $1.90 billion in the same month of previous year. Inflows were 20% higher compared to February 2021, the State Bank of Pakistan (SBP) reported on Monday.
Cumulatively, in the first nine months (Jul-Mar) of current fiscal year, the remittances grew 26% to $21.5 billion compared to $17 billion in the same period of previous fiscal year.
“The love and commitment of overseas Pakistanis to Pakistan is unparalleled.
You sent over $2 billion for 10 straight months despite Covid, breaking all records… We thank you,” Prime Minister Imran Khan said on his official Twitter handle.
Remittances are expected to increase further in April ahead of Eidul Fitr, which will fall in the middle of next month (May).
“Historically, remittances improve further ahead of Eid,” SBP Governor Reza Baqir said while speaking at the Pakistan Stock Exchange (PSX) on Monday.
“We have to thank our overseas Pakistanis for the unparalleled growth that we are seeing in remittances,” he said, adding that the growth in remittances was an answer to the concerns of people about the country’s foreign exchange outlook. Remittances from all over the world surged significantly, mainly from Saudi Arabia, the United Arab Emirates, the United Kingdom and the United States.
Remittances were last seen around $2.72 billion in July 2020. Receipts were higher than market expectations. Earlier, a leading bank’s head of remittances department estimated that inflows would be around $2.4 billion in March.
“Remittances for the full fiscal year 2020-21 will be around $28 billion,” he anticipated.
Earlier in January, the central bank revised up its projection for remittances to $24-25 billion for FY21.
The country had received recordhigh remittances of $23.1 billion in the preceding fiscal year.
The strong inflows have beaten forecasts of local and global research houses, including the Moody’s Investors Service, which anticipated a notable drop in remittances between January and June 2021 amid the Covid-19 pandemic.
With the latest surge, the uncertainty about remittances has come to an end as inflows in the remaining three months (Apr-Jun) of FY21 are expected to grow further due to the upcoming holy month of Ramazan starting in a couple of days and Eidul Fitr.
Remittances have remained strong above $2 billion per month due to increasing curbs on the illegal Hundi and Hawala network amid partial suspension of international flights during the ongoing pandemic.
Currency smugglers used to travel through the flights. Covid-19, however, remains a big challenge for the world.
It has the potential to impact the flow of remittances from developed countries to emerging economies like Pakistan, he said.
On the other hand, the recovery from the pandemic will help reopen global economies and improve the flow of remittances to Pakistan.
“Covid-19 has helped Pakistan come to know of its actual potential in terms of remittances. We should learn lessons from this and should not allow currency smugglers to reorganise in the good days ahead,” the banker said.
The SBP added, “Proactive policy measures taken by the government and the SBP to encourage more inflows through formal channels, limited cross-border travel in the face of Covid-19, medical expenses and altruistic transfers to Pakistan amidst the pandemic, and orderly foreign exchange market conditions are continuing to contribute to this sustained rise in workers’ remittances.”
Country-wise remittances Pakistanis sent 24% higher remittances at $690.4 million from Saudi Arabia in March 2021 compared to $556.7 million in the same month of previous year.
Non-resident Pakistanis dispatched 15.4% higher remittances from the UAE at $589.7 million in the month under review compared to $511 million in the corresponding month of previous year.
Moreover, the expatriates sent $371.2 million from the United Kingdom, a growth of 106% over $180.5 million remitted in March 2020. Remittances from the US rose 98% to $283.3 million compared to $142.9 million.
Remittances from other parts of the world also improved or remained stable in March.