Remittances to Pakistan hit $24.2 billion in 10 months of this fiscal year, the highest level on record and increased 29 percent from the same period last year, the central bank’s data showed on Tuesday.
The State Bank of Pakistan (SBP), in a statement, said proactive policy measures by the government and SBP to encourage more inflows through formal channels, curtailed cross border travel in the face of COVID-19, altruistic transfers to Pakistan amid the pandemic, orderly foreign exchange market conditions and, more recently, Eid-related inflows have contributed to record levels of remittances this year.
Remittance flows have already crossed the full FY2020 level by more than $1 billion. Pakistani diaspora had sent home $23.3 billion during the last fiscal year.
Workers’ remittances rose to an all-time monthly high of $2.8 billion in April 2021, 56 percent higher than during the same month last year.
The vast bulk of remittances to the country are sent from Saudi Arabia whose economy shows signs of recovery from the coronavirus pandemic.
“We foresee remittances to grow by 27 percent year-on-year in current fiscal year to $29.5 billion against $23.3 billion of last year given prolongation of travel restrictions amid resurgence of COVID,” said Awais Ashraf, head of research at Foundation Securities.
“Normalisation of air travel would be a key risk to remittances.”
Pakistan received $6.4 billion in remittances from overseas Pakistanis living in the Kingdom in July-April FY201, compared with $5.3 billion in the corresponding period last year, registering an increase of 20.1 percent.
Cash sent back to family members from Pakistani workers in the United Arab Emirates was at $5.1 billion in 10 months of the current fiscal year. That compared with $4.7 billion a year ago.
The country received $3.3 billion from the United Kingdom, up 68.2 percent from a year earlier.
Remittances from the United States rose 58.4 percent to $2.2 billion in July-April FY2021.
Analysts said besides many reasons, restrictions on cash transfer through illegal channels such as hawala/hundi to meet Financial Action Task Force’s requirement, also contributed to the rise in the amount of remittances.
The resurgent remittance flows have helped Pakistan accumulate around $1 billion current account surplus in July-March FY2021, bolster the foreign exchange reserves and stabilise currency.
Remittances are currently on track to further surpassing the International Monetary Fund’s and the SBP’s forecast of $24-25 billion for FY2021.