According to the State Bank of Pakistan, the increase in remittances for the 12th month in a row is due to the “proactive policy measures by the Government and the State Bank of Pakistan encouraging expats to use formal channels for their transactions” for the record inflows.
1/2 Remittances extended their record run of above $2bn in May. At $2.5bn, they were up 34% from a year ago. The usual post-Eid monthly dip was also much smaller this year. pic.twitter.com/9z2lmvC2er
— SBP (@StateBank_Pak) June 10, 2021
“On a cumulative basis, remittances surged to $26.7bn during July-May this fiscal year, higher by 29.4 per cent over the same period last year,” the State Bank of Pakistan said. “Remittances during the first eleven months of the outgoing fiscal year have already crossed the full FY20 level by $3.6bn,” it added.
The statement added that curtailed cross border travel in the face of Covid-19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions have contributed to record levels of remittances this year.
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According to the central bank, “Remittances received during May 2021 amounted to $2.5bn, which is 33.5pc higher than the same month last year. These were also higher than the monthly average of $2.4bn during July-April in the fiscal year 2020-21.”
However, on a month-on-month basis, workers’ remittances fell by 10.4pc in May 2021, compared to last month, when it rose to an all-time high of $2.8bn. “This fall was expected as remittances usually get slower in the period post Eidul Fitr,” the SBP underlined.
The central bank explained that “the seasonal decline in May 2021 was less than half the average decline observed during fiscal years 2016-2019. While in FY2020, remittances experienced an exceptional rise due to the easing of Covid lockdowns in the post-Eid period in Gulf countries.”
SBP further said the remittance inflows during July-May FY21 were mainly sourced from Saudi Arabia ($7bn), United Arab Emirates ($5.6bn), United Kingdom ($3.7bn) and the United States ($2.5bn).
Earlier this month, Special Assistant to the Prime Minister on Political Communication Dr Shahbaz Gill on Thursday appreciated the foreign expatriates who sent foreign remittances to the country which have now reached $29.1 billion from $21.7 billion last year, exhibiting 34 per cent increase.
In a statement issued here, he said besides tremendous increase in foreign remittances, it is for the first time in country history that Federal Bureau of Revenue (FBR) had amassed record Rs 4,100 billion as tax revenue.
Nearly 10 million Pakistanis live abroad and the money that they send back serves as a catalyst for investment in the country. In 2020 alone, $23 billion USD were received by the country in the form of remittances from this diaspora community, equivalent to around 8% of Pakistan’s GDP.
Remittances soar despite pandemic
Despite the ongoing pandemic, Pakistan’s remittances grew by nearly 25%. This helped in stabilizing the economy during the global crisis by creating a current account surplus. It is believed that the surge in remittances during 2020 can be attributed to the overseas Pakistani workers coming home after losing their jobs and bringing their savings with them.
Apart from that, the Pakistani diaspora exhibited strong confidence in PM’s khan latest initiatives launched for the overseas Pakistanis.
Earlier, SBP reported that the foreign exchange inflows through the Roshan Digital Accounts (RDAs) had reached $400 million within four months indicating the growing confidence of people in PM Khan’s latest initiative launched for overseas Pakistanis. The RDAs were basically introduced to allow Non-Resident Pakistanis (NRPs) to partake in banking, payment and investment activities in Pakistan without being physically present in the country.