Even though the World Bank’s initial reports stated otherwise, the global remittance flows have proven resilient during the ongoing COVID-19 pandemic.
This has especially been true for countries like Mexico, Egypt, Pakistan and Bangladesh. The global remittances were $702 billion, and out of that $540 billion are middle-income countries.
Coming to Pakistan specifically, the country’s worker’s remittances according to State Bank have grown 29 percent during the current fiscal year July to April 2021, compared to the same period last year.
Workers' remittances continue to surge, rising to an all-time high of $2.8bn in Apr21, 56% higher than a year ago. At $24.2bn during Jul-Apr FY21, up 29% from last year, these have also surpassed the full FY20 level by over $1bn, creating a new record. See https://t.co/7XBd4uNES4 pic.twitter.com/OIqQwlR88q
— SBP (@StateBank_Pak) May 18, 2021
According to the State Bank’s recent data, the remittances has reached an all-time high in $2.8 billion in April 2021. The remittances have increased Year-on-Year in April 2021 by 56 percent compared to April 2020, when it was $1.8 billion. Similarly, it has gone up from $18.8 billion from July to April 2020 to $24.2 billion during the same period in 2021.
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According to the data by State Bank, the remittances for 10MFY21 are already greater than the entire FY 2020. During the fiscal year 2020, the total remittances were recorded at $23.1 billion, while in 2021, as of yet they have climbed to $24 billion in 10 months.
According to the data, the highest amount of money remitted was from Saudi Arabia, with $6.4 billion during the 10MFY21, up 20.1 percent in the same period last year. It was followed by Dubai with $4.2 billion, the UK with $3.3 billion, the US with $2.2 billion, and Oman with $898.1 million in that order.
According to experts believe restrictions on international travel — for both leisure and religious purposes — because of the pandemic, FATF-related curbs on illegal cash transfer through informal or illegal channels, and incentives offered by the central bank to overseas Pakistanis using banking channels to remit their savings have driven growth in remittances in spite of impacts of the Covid-19 crisis on the economies in the host countries.
This is because before, money transfer was unregulated under popular practices of Hawala and Hundi, which have been curbed recently
Also, the initiative of the State Bank of Pakistan in introducing Roshan Digital Accounts last September, which allows overseas Pakistanis to digitally open a bank account with local banks for the online stock market and real estate investments, has helped attract more than $1 billion into the country in the last seven months.
The rising remittance flow has helped the State Bank of Pakistan replenish its otherwise dwindling foreign exchange reserves to a record high. This increase in remittances has supported the current account that has posted a surplus of over $945 million from July to April of the current financial year.
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Regional change in remittances
Pakistan is ranked 6th amongst the top ten Remittance recipients, with the second-highest increase in remittances in 2020, compared to 2019, lagging Bangladesh. Bangladesh reported the highest increase of 18.4 percent from 2019 to 2020, reaching a value of $21.8 billion. On the other hand, Pakistan reporting an increase of 17.4 percent, reaching $26.1 billion in 2020.
In absolute terms according to Statista, India leads the remittances chart with $83.1 billion, followed by China who received $59.5 billion in 2020.
According to new World Bank data, global remittances are expected to total $702 billion in 2020, down from $719 billion in 2019, with a decrease of 2.4 percent. Of that total, $540 billion are expected to have flown into low and middle-income countries, down from $548 billion, down only 1.6 percent.
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